Treasury's Mint awarded $18M for precious metals, highlighting a significant need for raw materials

Contract Overview

Contract Amount: $18,008,620 ($18.0M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2010-06-01

End Date: 2010-06-07

Contract Duration: 6 days

Daily Burn Rate: $3.0M/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 $18.0 million to A-MARK PRECIOUS METALS, INC. for work described as: RAW GOLD MATERIAL Key points: 1. The contract value of $18 million indicates substantial investment in essential raw materials. 2. Competition dynamics for this contract are crucial for ensuring fair pricing of precious metals. 3. The fixed-price contract type suggests a clear understanding of project scope and cost. 4. The short duration of the award (6 days) points to an urgent or immediate need for the materials. 5. The specific material category (Nonferrous Metal) suggests specialized industrial applications. 6. The awarding agency, the United States Mint, implies a direct link to coinage or bullion production.

Value Assessment

Rating: good

The contract value of $18 million for raw gold material appears substantial, reflecting the market price of such commodities. Benchmarking against similar contracts for precious metals would be necessary for a precise value-for-money assessment. However, given the nature of the material and the awarding agency (US Mint), the price is likely aligned with market rates. The fixed-price nature of the contract provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The fact that it was a delivery order under a larger contract suggests a pre-established competitive process.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

The primary beneficiaries are likely the United States Mint and potentially the broader precious metals market. The service delivered is the provision of raw gold material, essential for minting operations. The geographic impact is primarily national, supporting the US Mint's operations. Workforce implications are indirect, supporting jobs in mining, refining, and minting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the precious metals market impacting long-term value.
Dependence on a limited number of suppliers for high-quality raw gold material.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Fixed-price contract provides cost certainty for the government.
Awarded to a reputable supplier in the precious metals industry.

Sector Analysis

The contract falls within the broader mining and metals sector, specifically dealing with nonferrous metals. The market for raw gold is global and subject to significant price fluctuations based on economic conditions, geopolitical events, and investor demand. The United States Mint is a major consumer of precious metals for coinage and bullion, making this a critical procurement within the sector.

Small Business Impact

Information regarding small business set-asides or subcontracting is not explicitly provided for this specific delivery order. However, the nature of precious metals procurement often involves large, specialized suppliers. Further investigation would be needed to determine if small businesses were involved in the supply chain or subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's internal controls and the United States Mint's procurement regulations. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Precious Metals Procurement
Coinage and Bullion Production
Raw Material Acquisition
Department of the Treasury Procurements

Risk Flags

Price Volatility Risk
Supply Chain Risk
Quality Assurance Risk
Security Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $18.0 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 $18.0 million.

What is the period of performance?

Start: 2010-06-01. End: 2010-06-07.

What is the historical spending pattern for raw gold material by the United States Mint?

Analyzing historical spending for raw gold material by the US Mint would involve examining contract awards over several fiscal years. This would reveal trends in contract values, quantities procured, and the number of competitive solicitations. Such an analysis could identify periods of increased demand, potential price spikes, or shifts in procurement strategies. For instance, comparing the $18 million award to previous years' spending could indicate whether this represents a typical procurement or an outlier driven by specific market conditions or production targets. Understanding these patterns is crucial for budget forecasting and assessing long-term value for taxpayer investment in precious metals.

How does the price of gold at the time of this contract award compare to market benchmarks?

To assess the value for money, the price paid for the raw gold material in this $18 million contract should be benchmarked against prevailing market prices at the time of the award (June 2010). This involves consulting historical commodity price data for gold. Factors such as purity, form (e.g., doré bars, refined gold), and delivery terms can influence the final price. If the contract price significantly deviates from the market benchmark, it could indicate either an exceptionally good deal for the government or a potential overpayment. The fixed-price nature of the contract suggests the price was agreed upon upfront, making this comparison vital for evaluating the negotiation outcome.

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

Procuring raw gold material carries several inherent risks, including price volatility, supply chain disruptions, quality control issues, and security concerns during transport and storage. Price volatility is a major risk, as gold prices can fluctuate significantly. Supply chain risks might involve geopolitical instability in mining regions or issues with refiners. Quality control is paramount to ensure the gold meets the Mint's specifications for purity and form. Security is also a critical concern due to the high value of the material. Mitigation strategies could include hedging against price fluctuations, diversifying suppliers, implementing rigorous quality assurance protocols, and employing robust security measures for logistics and storage. The contract's terms and the contractor's track record would provide insights into how these risks were addressed.

What is the track record of A-Mark Precious Metals, Inc. in supplying raw materials to government agencies?

Evaluating the track record of A-Mark Precious Metals, Inc. is essential for understanding their reliability and performance in fulfilling government contracts. This involves reviewing their past performance on similar contracts, particularly with the US Mint or other agencies requiring precious metals. Key aspects to examine include on-time delivery, adherence to quality specifications, pricing competitiveness, and any history of disputes or contract terminations. A positive track record suggests a lower risk for this $18 million award, indicating the contractor's capability to meet the demanding requirements of the US Mint. Conversely, any past issues would raise concerns about potential performance risks and the overall value for money.

How does this $18 million contract for raw gold fit into the overall budget and procurement strategy of the US Mint?

Understanding how this $18 million contract fits into the US Mint's broader financial picture and procurement strategy is crucial for assessing its significance. The Mint operates under specific appropriations and revenue streams, often tied to seigniorage from circulating coinage and sales of bullion products. This contract represents a significant expenditure for raw materials, directly impacting the cost of goods sold for their products. Analyzing its proportion relative to the Mint's total annual budget, its place within the broader category of raw material procurements, and whether it aligns with long-term production goals or short-term market opportunities provides context. It helps determine if the procurement is strategically aligned with the Mint's mission and financial health.

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: $18,008,620

Exercised Options: $18,008,620

Current Obligation: $18,008,620

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: TMHQ10C0040

IDV Type: IDC

Timeline