Treasury's Mint awarded $74.3M for gold material, with a $7.4M delivery order, to A-Mark Precious Metals

Contract Overview

Contract Amount: $74,362,933 ($74.4M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2010-06-11

End Date: 2010-06-21

Contract Duration: 10 days

Daily Burn Rate: $7.4M/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 $74.4 million to A-MARK PRECIOUS METALS, INC. for work described as: RAW GOLD MATERIAL Key points: 1. The contract value represents a significant investment in raw materials for minting operations. 2. Competition dynamics for precious metals supply can be influenced by global market volatility. 3. Potential risks include price fluctuations and supply chain disruptions in the precious metals market. 4. Performance context is tied to the timely delivery of high-quality gold for coinage. 5. This contract positions the U.S. Mint within the specialized sector of precious metals procurement. 6. The award was made under a firm-fixed-price contract, indicating price certainty for the government.

Value Assessment

Rating: good

The total contract value of $74.3 million for raw gold material appears reasonable given the commodity's market price and the scale of U.S. Mint operations. The specific delivery order of $7.4 million represents a portion of the total anticipated need. Benchmarking against similar large-scale precious metal procurements by government entities or major industrial consumers would provide further context on value for money. The firm-fixed-price structure helps mitigate cost overruns for this specific order.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified suppliers had the opportunity to bid. The presence of two bidders indicates a degree of competition, which is generally favorable for price discovery and achieving competitive pricing. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would offer a more complete picture of the competitive landscape.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by encouraging multiple suppliers to offer their best terms.

Public Impact

The primary beneficiaries are the U.S. Mint and, by extension, the public through the production of coinage and bullion. The services delivered involve the supply of essential raw materials for minting operations. The geographic impact is primarily national, supporting the U.S. Mint's facilities. Workforce implications are indirect, supporting the jobs involved in mining, refining, and transporting precious metals, as well as those at the U.S. Mint.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Volatility in global gold prices could impact the actual cost of materials over the contract's life.
Dependence on a single supplier for a critical raw material, even with competition, carries inherent supply chain risks.
Ensuring consistent quality of raw gold material is crucial for the integrity of U.S. coinage.

Positive Signals

Awarded through full and open competition, maximizing potential for competitive pricing.
Firm-fixed-price contract provides cost certainty for the awarded delivery order.
The U.S. Mint has established processes for procuring and verifying precious metals.

Sector Analysis

The procurement of nonferrous metals, specifically gold, falls within the broader industrial and materials sector. The market for precious metals is global and subject to significant price volatility driven by economic conditions, geopolitical events, and investor demand. The U.S. Mint is a major consumer of precious metals for circulating coinage, commemorative coins, and bullion products. Comparable spending benchmarks would involve analyzing other government agencies or large industrial users that procure similar quantities of gold.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor's name and the nature of the commodity. There is no explicit information provided regarding subcontracting plans with small businesses. The focus is on securing a large volume of a specialized commodity, which typically involves established, larger suppliers in the precious metals market.

Oversight & Accountability

The U.S. Mint, as part of the Department of the Treasury, operates under established procurement regulations and oversight mechanisms. The contract award process, including competition and evaluation, is subject to federal acquisition regulations. Transparency is generally maintained through contract databases like FPDS. Specific oversight for the quality and delivery of the gold material would likely be managed by the U.S. Mint's quality assurance and contracting officers.

Related Government Programs

Department of the Treasury Procurement
U.S. Mint Coinage Production
Precious Metals Market
Raw Material Procurement

Risk Flags

Potential for price volatility in the precious metals market.
Supply chain risks associated with global commodity sourcing.
Ensuring consistent quality of raw gold material.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $74.4 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 $74.4 million.

What is the period of performance?

Start: 2010-06-11. End: 2010-06-21.

What is the historical spending pattern for raw gold material by the U.S. Mint?

Historical spending data for raw gold material by the U.S. Mint would reveal trends in procurement volume, pricing, and supplier relationships over time. Analyzing past contracts can indicate whether the current award of $74.3 million is consistent with previous procurement levels or represents a significant increase or decrease. Factors such as changes in coinage demand, bullion sales targets, and market price fluctuations would influence these historical patterns. Understanding this context is crucial for assessing the long-term financial commitment and strategic sourcing of gold by the Mint. Without specific historical data, it's difficult to definitively benchmark this award against past expenditures.

How does the price paid for this gold compare to prevailing market rates at the time of award?

Comparing the price paid for the gold in this contract to prevailing market rates at the time of award is essential for assessing value for money. The U.S. Mint likely aims to secure materials at or near spot prices, potentially with a premium for refining, assaying, and delivery. Market rates for gold fluctuate daily based on global supply and demand, economic indicators, and geopolitical events. A detailed analysis would require accessing historical commodity price data for the period surrounding the contract award (June 2010) and comparing it to the unit price negotiated in the contract. A firm-fixed-price contract suggests a specific price was agreed upon, which can then be benchmarked.

What are the specific quality standards required for the raw gold material?

The U.S. Mint requires raw gold material to meet stringent purity and quality standards to ensure the integrity and consistency of its coinage and bullion products. These standards typically involve specific fineness levels (e.g., .9999 fine gold) and limits on impurities. The contract likely specifies these requirements, and the supplier, A-Mark Precious Metals, Inc., would be obligated to provide gold that meets or exceeds them. Quality assurance processes, including independent assaying and testing, are critical to verify compliance. Failure to meet these standards could result in rejection of the material and potential penalties for the contractor.

What is A-Mark Precious Metals, Inc.'s track record with government contracts, particularly for precious metals?

A-Mark Precious Metals, Inc.'s track record with government contracts, especially for precious metals, provides insight into their reliability and performance. As a significant player in the precious metals market, they may have prior experience supplying government entities. Reviewing their past performance on federal contracts, including any awards, past performance evaluations, and any instances of disputes or contract terminations, would be informative. This information helps assess their capacity to fulfill large-scale government orders, adhere to delivery schedules, and meet quality specifications. A history of successful contract completion would bolster confidence in their ability to perform on this award.

What are the potential risks associated with relying on A-Mark Precious Metals, Inc. for this supply?

Potential risks associated with relying on A-Mark Precious Metals, Inc. include market-specific risks inherent to the precious metals industry, such as price volatility and supply chain disruptions. While A-Mark is a known entity, any single supplier carries some level of risk. This could manifest as delivery delays, quality control issues, or financial instability of the supplier, although the latter is less likely for a company of this nature. The firm-fixed-price nature of the delivery order mitigates some price risk for the government, but supply continuity remains a key consideration. The U.S. Mint likely has contingency plans and robust supplier vetting processes to manage these risks.

How does the competition level (2 bidders) impact the final price and value for taxpayers?

A competition involving two bidders, while better than a sole-source award, is less competitive than one with numerous offers. With only two bidders, there is a risk that the pricing may not be as aggressively competitive as it could be with a larger pool of suppliers vying for the contract. The U.S. Mint would have evaluated proposals based on price and other factors, but the limited number of offers might provide less leverage to negotiate the absolute lowest price. Taxpayers benefit from competition, but the degree of benefit is often correlated with the number of viable bidders. The government's procurement strategy aims to encourage sufficient competition to ensure fair market prices.

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: $74,362,933

Exercised Options: $74,362,933

Current Obligation: $74,362,933

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: TMHQ10C0040

IDV Type: IDC

Timeline