Treasury's $16.2M contract for base metal coinage production awarded to PMX Industries

Contract Overview

Contract Amount: $16,249,208 ($16.2M)

Contractor: PMX Industries, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2008-02-28

End Date: 2012-09-30

Contract Duration: 1,676 days

Daily Burn Rate: $9.7K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: PROVIDE BASE METAL FOR CIRCULATING COINAGE.

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52404

State: Iowa Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.2 million to PMX INDUSTRIES, INC. for work described as: PROVIDE BASE METAL FOR CIRCULATING COINAGE. Key points: 1. Value for money assessed through fixed-price contract with economic price adjustment. 2. Competition dynamics indicate a competitive delivery order process. 3. Risk indicators include potential price fluctuations due to economic adjustments. 4. Performance context tied to the consistent demand for circulating coinage. 5. Sector positioning within the manufacturing and defense industrial base. 6. Contract duration of over 4 years suggests a stable, long-term need.

Value Assessment

Rating: good

The contract value of $16.2 million over approximately four years for base metal rolling and extruding appears reasonable given the specialized nature of coinage production. Benchmarking against similar contracts for metal processing is challenging without specific details on material grades and processing complexity. However, the fixed-price structure with economic price adjustment aims to balance cost control with market volatility, suggesting a fair approach to pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that multiple vendors likely had the opportunity to bid. The presence of two bids suggests a moderate level of competition for this specific order. While competitive, the exact number of potential bidders in the broader market for such specialized metal processing is not detailed, but the process itself points to an effort to secure competitive pricing.

Taxpayer Impact: A competitive award process generally benefits taxpayers by driving down prices through vendor rivalry, ensuring the government receives the best possible value for its spending on essential materials like those for coinage.

Public Impact

The primary beneficiaries are the United States Mint and the general public, who rely on a steady supply of circulating coinage. Services delivered include the essential processing of base metals into forms suitable for coin minting. Geographic impact is national, ensuring coin production capabilities across the United States. Workforce implications include support for skilled manufacturing jobs within the metals industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause.
Reliance on a single supplier for a critical component of coinage production.
Limited transparency on the specific technical specifications and quality control measures.

Positive Signals

Awarded through a competitive process, suggesting fair market pricing.
Long-term contract provides stability for production and supply chain.
Contractor has a track record with the US Mint for similar services.

Sector Analysis

This contract falls within the broader industrial manufacturing sector, specifically focusing on metal processing and fabrication. The market for specialized metal rolling and extruding for coinage is relatively niche, with a limited number of qualified suppliers capable of meeting the stringent specifications required by the U.S. Mint. Comparable spending benchmarks are difficult to establish due to the unique nature of coinage production, but this contract represents a significant investment in maintaining the nation's ability to produce currency.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As a competitive delivery order, it is possible that small businesses could have participated if they met the qualifications. However, the nature of specialized metal processing for coinage often requires significant capital investment and established infrastructure, which may favor larger, more experienced firms. Subcontracting opportunities for small businesses are not detailed but could exist within the supply chain for raw materials or specialized equipment.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Treasury and the United States Mint. Accountability measures are embedded in the fixed-price contract with economic price adjustment, requiring the contractor to meet specific quality and delivery standards. Transparency is generally maintained through contract awards databases, though detailed performance metrics and quality control reports may not be publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Coinage Metal Purchases
Manufacturing and Production Services
Industrial Materials Procurement
U.S. Mint Operations

Risk Flags

Potential for price volatility due to economic price adjustment.
Dependence on a single supplier for critical coinage materials.
Limited public detail on specific quality control and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.2 million to PMX INDUSTRIES, INC.. PROVIDE BASE METAL FOR CIRCULATING COINAGE.

Who is the contractor on this award?

The obligated recipient is PMX INDUSTRIES, INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (United States Mint).

What is the total obligated amount?

The obligated amount is $16.2 million.

What is the period of performance?

Start: 2008-02-28. End: 2012-09-30.

What is the historical spending pattern for base metal coinage production by the U.S. Mint?

Historical spending on base metal coinage production by the U.S. Mint has varied year to year, influenced by factors such as demand for circulating coins, the price of raw materials (like copper and zinc), and the specific contracts awarded. While this specific contract with PMX Industries for $16.2 million covers a defined period, the Mint procures metals and processing services through various mechanisms. Analyzing aggregate spending requires looking at annual reports and procurement data for metal acquisition and processing services over extended periods. For instance, in fiscal year 2022, the Mint reported striking over 11.1 billion circulating coins. The cost associated with the metals and their processing constitutes a significant portion of the Mint's operational expenses, often fluctuating with commodity markets. Detailed historical data would reveal trends in contract values, the number of awarded contracts, and the average cost per unit of metal processed.

How does the economic price adjustment clause in this contract typically function?

The economic price adjustment (EPA) clause in this contract allows for modifications to the contract price based on fluctuations in specified economic factors, most commonly the cost of raw materials or labor. For this contract, it likely relates to the market price of copper and potentially other metals used in coinage. The clause is designed to protect both the contractor from unforeseen cost increases and the government from paying excessively inflated prices if market conditions change significantly. The specific formula or index used to trigger and calculate price adjustments would be detailed within the contract's terms and conditions. This mechanism aims to maintain the contractor's profitability and ensure a stable supply chain without locking in potentially outdated prices for an extended duration.

What are the specific risks associated with relying on PMX Industries for this contract?

The primary risks associated with relying on PMX Industries for this contract include potential supply chain disruptions if the company faces operational issues, quality control failures that could lead to defective coinage materials, or significant price increases driven by the economic price adjustment clause if metal markets become volatile. Dependence on a single contractor for a critical component like base metal processing can also pose a risk if the contractor's financial stability is compromised or if they face labor disputes. Furthermore, any unforeseen geopolitical events impacting the availability or cost of raw materials could indirectly affect the contractor's ability to fulfill the contract at the anticipated price points.

What is the typical performance standard for contractors providing metal processing for coinage?

Contractors providing metal processing for coinage, such as PMX Industries, are held to stringent performance standards by the U.S. Mint. These standards typically encompass precise material composition, dimensional tolerances, surface finish, and metallurgical properties to ensure the metals are suitable for high-speed minting operations. Key performance indicators often include on-time delivery, adherence to quality specifications (e.g., hardness, tensile strength, ductility), and consistency across production batches. Failure to meet these standards can result in rejected materials, production delays, and potential financial penalties. The U.S. Mint conducts rigorous inspections and testing to verify compliance throughout the contract period.

How does this contract compare to other U.S. Mint procurement strategies for coinage materials?

This contract represents a specific instance of the U.S. Mint procuring processed base metals through a competitive delivery order. The Mint employs various procurement strategies, including direct purchase of raw metals, contracts for specialized processing, and potentially long-term agreements for critical materials. The use of competitive delivery orders suggests the Mint sought to leverage market competition for this particular requirement, balancing cost and availability. Compared to sole-source or longer-term fixed-price contracts, this approach allows for flexibility and potentially better pricing on an order-by-order basis, while the EPA clause mitigates some risk associated with price volatility over the contract's duration.

Industry Classification

NAICS: Manufacturing › Nonferrous Metal (except Aluminum) Production and Processing › Copper Rolling, Drawing, and Extruding

Product/Service Code: METAL BARS, SHEETS, SHAPES

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Poongsan Holdings Corporation (UEI: 687755603)

Address: 5300 WILLOW CREEK DR SW, CEDAR RAPIDS, IA, 02

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,249,208

Exercised Options: $16,249,208

Current Obligation: $16,249,208

Parent Contract

Parent Award PIID: TMHQ08C0005

IDV Type: IDC

Timeline