What outfit did about $3 billion worth of transactions last year, up about 20 percent in volume, saved its customers millions and reinvested about $16 million in community-development projects, mostly in its five-county central Minnesota region?

Would you believe Sourcewell, a special-purpose government agency based in Staples, located about 140 miles northwest of the Twin Cities.

“We believe we create lift for our region,” said five-year Sourcewell CEO Chad Coauette. “My eight bosses, Sourcewell’s board … believe this is very important work.

“Our story is a win-win for our members, our service providers, and the communities that we serve.”

Sourcewell this month changed its name after 40 years from the more-cumbersome National Joint Powers Alliance.

It is one of several cooperative-purchasing agencies authorized in 1978 by the Legislature to help counties and municipalities buy cooperatively through an experienced procurement office to save money.

“And we are now the largest in the country,” added Coauette. “Out of little Staples, Minnesota.”

Coauette, 44, a native of Crookston with a doctorate in educational administration from the University of North Dakota, worked for 15 years as an education and operations dean at three Minnesota community colleges.

He has more than tripled the purchasing volume executed by Sourcewell over the past five years, to about $3 billion in the fiscal year ended June 30.

Sourcewell, with a staff of 12, takes a 1 percent-plus fee in aggregate from the transactions that it negotiates on behalf of thousands of member-government and nonprofit customers around the country.

Sourcewell negotiates with 300 “partner vendors” for the likes snowplows, firetrucks, building contractors, insurance coverage, technology and other products and services.

Sourcewell’s 50,000 members, 95 percent of which are outside Minnesota, save money because of the purchasing-scale advantage that they gain from being part of the cooperative.

Whether purchasing buses or food in school districts across the country, a municipal waste service in Alabama or the conversion to hybrid-electric vehicles in California, Sourcewell’s members also benefit from its expertise and being part of a discount negotiating, focused cooperative procurement agent.

That also means that the members don’t have to employ folks who specialize in buying things and doing comparison shopping. That can be significant, particularly for small units of government who may only need one squad car or a couple pickup trucks every several years.

“There’s no cost or obligation to our 30,000 members who will use us in a year,” Coauette said. “It starts with a member need. Whether it’s a member in California buying a Polaris four-wheeler for park rangers, or an ice arena in Minnesota or somebody who needs something from Staples Office Supply, or John Deere.”

Sourcewell started as one of several “education service cooperatives” in Minnesota empowered to make joint purchases on behalf of cooperating regional school districts. Not a whole lot happened for the first 20 years.

Sourcewell, since 1998, has prospered as an expanding regional purchasing agent.

Coauette, who is paid about $164,000 annually, reports to a board of eight area elected government officials.

“I was a dean for 15 years in community colleges and I was applying for two-year college presidencies within Minnesota,” he recalled. “I loved making a difference. And working on strategic partnerships.

“I heard about the Sourcewell opportunity. It was service work and I love that. I put my hat in the ring.”

Sourcewell didn’t grow much outside its five-county neighborhood until 1998.

Over 15 years, under Coauette’s predecessor, it grew to $800 million in annual purchases.

Under Coauette, since July 2013, it has grown to $3 billion in annual purchases.

The operation can run itself most years on about half the revenue it takes in.

Sourcewell’s board last year approved about $16 million in community support grants, largely in Todd and the surrounding four counties.

The grants are made in the area of education, civic organizations and economic-development projects.

“Our board puts its money where its mouth is,” Coauette said. “We also, on our staff of 12, have an education-services division.

“Their day-to-day work is to work with our [local] school districts to help create best practices. Seminars and professional development. Our staff is basically embedded in the districts many days of the year.”

 

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.