Treasury's Mint awards $20.9M for gold material, highlighting a firm fixed-price contract with full and open competition

Contract Overview

Contract Amount: $20,920,870 ($20.9M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2010-05-27

End Date: 2010-06-05

Contract Duration: 9 days

Daily Burn Rate: $2.3M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RAW GOLD MATERIAL

Place of Performance

Location: SANTA MONICA, LOS ANGELES County, CALIFORNIA, 90401

State: California Government Spending

Plain-Language Summary

Department of the Treasury obligated $20.9 million to A-MARK PRECIOUS METALS, INC. for work described as: RAW GOLD MATERIAL Key points: 1. Contract awarded under firm fixed-price terms, indicating predictable costs for the government. 2. Full and open competition suggests a robust bidding process, potentially leading to better pricing. 3. The contract duration of 9 days for delivery order suggests a rapid fulfillment requirement. 4. The award value of $20.9M for raw gold material indicates significant government procurement in precious metals. 5. The contractor, A-MARK PRECIOUS METALS, INC., is a key player in the precious metals market. 6. The specific commodity, nonferrous metal rolling, drawing, and extruding, points to specialized material needs.

Value Assessment

Rating: good

The contract's firm fixed-price structure is favorable for cost control. While a direct per-unit cost comparison for raw gold material is difficult without market fluctuations and specific alloy details, the total award of $20.9M for a 9-day delivery order suggests a substantial volume. Benchmarking against similar large-scale precious metal procurements would be necessary for a more precise value assessment, but the competitive nature of the award provides a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The presence of two bidders (no: 2) indicates a degree of competition, though the exact number of proposals received is not specified. A competitive process generally aids in price discovery and ensures the government receives offers from multiple market participants.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by fostering a market-driven price for the gold material.

Public Impact

The United States Mint benefits from a secure and timely supply of raw gold material for its operations. This contract supports the minting of coins and other gold-based products, potentially serving numismatic and investment markets. The geographic impact is primarily national, as the Mint operates nationwide, though the material sourcing may have international implications. Workforce implications are likely internal to the Mint, related to the processing and utilization of the acquired gold.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the raw gold market impacting future procurements.
Dependence on a single contractor for a critical raw material could pose supply chain risks if not managed.
The short 9-day delivery window might indicate a high-urgency need, potentially leading to premium pricing if not planned.

Positive Signals

Firm fixed-price contract provides cost certainty for this specific procurement.
Full and open competition suggests a competitive market for this type of material.
The contractor, A-MARK PRECIOUS METALS, INC., is likely experienced in handling large precious metal transactions.

Sector Analysis

The procurement falls within the broader metals and minerals sector, specifically focusing on precious metals. The market for raw gold is global and subject to significant price fluctuations based on economic conditions, geopolitical events, and market demand. The United States Mint is a major consumer of precious metals for coinage and bullion, and its procurement activities can influence market dynamics. Comparable spending benchmarks would involve analyzing other large government or industrial purchases of gold.

Small Business Impact

There is no indication of a small business set-aside for this contract (sb: false). Given the substantial value and specialized nature of procuring large quantities of raw gold material, it is unlikely that small businesses would be primary bidders or recipients of subcontracts unless they are specialized processors or suppliers within the precious metals supply chain. The focus appears to be on securing the material through the most capable and competitive means.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the United States Mint's internal procurement and financial management systems. Accountability is ensured through the firm fixed-price contract terms, requiring delivery of specified material at an agreed price. Transparency is facilitated by the public nature of federal contract awards, though detailed operational oversight specifics are not provided.

Related Government Programs

Precious Metals Procurement
Commodity Contracts
Manufacturing Materials
Government Supply Chain Management

Risk Flags

Potential for price volatility in the gold market.
Dependence on contractor's supply chain reliability.
Short delivery window requires efficient logistics.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $20.9 million to A-MARK PRECIOUS METALS, INC.. RAW GOLD MATERIAL

Who is the contractor on this award?

The obligated recipient is A-MARK PRECIOUS METALS, 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 $20.9 million.

What is the period of performance?

Start: 2010-05-27. End: 2010-06-05.

What is the track record of A-MARK PRECIOUS METALS, INC. with the federal government, particularly in fulfilling large precious metal contracts?

A-MARK PRECIOUS METALS, INC. has a history of federal contracting, as evidenced by this award. To fully assess their track record, a deeper dive into their past performance with the US Mint and other federal agencies would be necessary. This would involve reviewing contract histories for on-time delivery, quality compliance, and any past disputes or performance issues. Their specialization in precious metals suggests they are a qualified entity for such procurements, but historical data is key to confirming consistent performance and reliability, especially for high-value, time-sensitive awards like this one.

How does the $20.9 million award compare to historical spending by the US Mint for similar raw gold materials?

Comparing this $20.9 million award to historical spending requires access to the US Mint's historical procurement data for raw gold. Factors such as the quantity of gold purchased, the purity, and prevailing market prices at the time of each award are crucial for a meaningful comparison. If this award represents a significantly higher or lower amount than typical for a similar quantity and quality of gold, it could indicate changes in market prices, shifts in the Mint's production needs, or differences in contract terms. Analyzing trends over several years would provide context on whether this award is within the expected range of spending.

What are the specific risks associated with procuring raw gold material, and how are they mitigated in this contract?

Key risks in procuring raw gold include price volatility, supply chain disruptions, and quality assurance. The firm fixed-price (FFP) nature of this contract mitigates price risk for the government, locking in the cost at the time of award. However, the supplier bears the risk of price fluctuations. Supply chain risks are managed through the competitive bidding process, selecting a supplier with a demonstrated ability to deliver. Quality assurance would be handled through the Mint's internal processes and contract specifications, ensuring the gold meets required purity and form standards. The short delivery window (9 days) suggests a need for robust logistics planning by the contractor.

What is the expected effectiveness of this contract in ensuring the US Mint has adequate gold supply for its operations?

The effectiveness of this contract hinges on the timely and compliant delivery of the specified raw gold material by A-MARK PRECIOUS METALS, INC. Given the award was made under full and open competition and is a firm fixed-price contract, it is designed to ensure the Mint receives the necessary gold at a predetermined cost. The 9-day delivery order period suggests this was intended to meet an immediate or short-term need. Assuming the contractor performs as agreed, the contract should be effective in bolstering the Mint's gold inventory for its production cycles, whether for circulating coinage, bullion, or other products.

How does the contract type (Firm Fixed Price) and competition level (Full and Open) influence the overall value for taxpayers?

The combination of Firm Fixed Price (FFP) and Full and Open Competition generally maximizes value for taxpayers. FFP shifts the risk of cost overruns to the contractor, providing budget certainty for the government. Full and Open Competition ensures that multiple potential suppliers have the opportunity to bid, driving prices down through market forces and increasing the likelihood of selecting the most cost-effective offer. While the specific market dynamics for raw gold are complex, these contract features are designed to secure the material at the best possible price and terms, thereby protecting taxpayer interests.

Industry Classification

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

Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Spectrum Group International Inc.

Address: 429 SANTA MONICA BLVD, SANTA MONICA, CA, 90401

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $20,920,870

Exercised Options: $20,920,870

Current Obligation: $20,920,870

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: TMHQ10C0040

IDV Type: IDC

Timeline