While Cabonne and Blayney councils avoided a forced merger with Orange City Council in 2016 they are now looking at forming a 'strategic alliance' with their larger neighbour.
At its July meeting Cabonne Council voted to approve the Mayor and General Manager to sign the BCO Alliance Memorandum of Understanding at a formal event to be held in September 2020.
The formal alliance would see a board set up to oversee sharing resources, services and information between the councils.
A report to the council said a meeting between the mayors and general managers of the three councils was held a few weeks ago to discuss the plan.
It said the alliance would allow for joint tenders and purchasing arrangements between the councils, sharing expertise, seconding staff to other councils, cross-border road construction and maintenance and sharing plant and equipment.
The report said the councils had previously worked together on strategic documents including a regional economic development strategy and an industrial land strategy.
And they already pooled tourism and marketing resources to establish Orange360.
"The organisational scale, size and geographical fit are considered a positive for this new strategic alliance between Blayney Shire, Cabonne and Orange City councils," it said.
A draft memorandum of understanding has been prepared.
It is proposed the alliance's board would consist of the three mayors and general managers who would meet at least twice a year.
The chairman would be a mayor, with them alternating the role every two years.
Orange City Council's mayor would be the inaugural chairman.
Orange mayor Reg Kidd said it could lead to cost savings on building roads and infrastructure and could also provided wider training opportunities for young workers.
He said there was plenty of scope for co-operation between the three adjacent areas.