Treasury's $17M precious metals contract awarded to A-Mark Precious Metals for raw gold material

Contract Overview

Contract Amount: $17,048,420 ($17.0M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2010-06-25

End Date: 2010-06-28

Contract Duration: 3 days

Daily Burn Rate: $5.7M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

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 $17.0 million to A-MARK PRECIOUS METALS, INC. for work described as: RAW GOLD MATERIAL Key points: 1. Contract value of $17.05 million for raw gold material. 2. Awarded to A-Mark Precious Metals, Inc. 3. Contract type is Firm Fixed Price. 4. Duration of 3 years. 5. Competition was Full and Open. 6. Delivery Order awarded under a larger contract. 7. Geographic location of performance is California.

Value Assessment

Rating: good

The contract value of $17.05 million for raw gold material appears reasonable given the commodity's market fluctuations. Benchmarking against similar government procurements for precious metals is challenging due to the specialized nature of the material and the fluctuating global prices. However, the firm fixed price structure suggests a degree of cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of multiple bidders generally fosters competitive pricing and ensures the government receives the best value. Specific details on the number of bidders are not provided, but the designation implies a robust competitive process.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces, ensuring that government funds are used efficiently.

Public Impact

Benefits the United States Mint by supplying essential raw materials for its operations. Ensures the availability of gold for minting coins and other products. Supports the continuity of operations for a key government entity. Potential indirect impact on the precious metals supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility of raw gold material impacting final costs.
Dependence on a single supplier for a critical raw material.

Positive Signals

Firm Fixed Price contract provides cost predictability.
Full and open competition suggests a competitive award process.
Award to an established company in the precious metals industry.

Sector Analysis

This contract falls within the broader 'Other' sector, specifically related to the procurement of raw materials for industrial and governmental use. The market for precious metals is global and highly volatile, influenced by economic conditions, geopolitical events, and investor demand. The United States Mint's procurement of raw gold is a specialized segment within this market, focused on ensuring supply for national coinage and reserves.

Small Business Impact

Information regarding small business set-asides or subcontracting is not available for this contract. As the contract is for raw gold material, it is likely that the primary contractor specializes in precious metals trading and processing, with potential for subcontracting to smaller entities within the supply chain, though this is not explicitly detailed.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a Delivery Order, it is part of a larger contracting vehicle, which would have undergone initial review. Accountability is maintained through the firm fixed price structure and the delivery terms. Transparency is generally provided through federal contract databases, though specific performance metrics are not detailed here.

Related Government Programs

United States Mint Operations
Precious Metals Procurement
Government Commodity Contracts

Risk Flags

Commodity Price Volatility
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $17.0 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 $17.0 million.

What is the period of performance?

Start: 2010-06-25. End: 2010-06-28.

What is the track record of A-Mark Precious Metals, Inc. with government contracts?

A-Mark Precious Metals, Inc. has a history of engaging with government entities, including the U.S. Mint, for the supply of precious metals. Their experience in this specialized market suggests a capacity to meet the government's requirements. Analyzing their past performance on similar contracts, including delivery timeliness, quality of materials, and adherence to pricing agreements, would provide further insight into their reliability. Publicly available contract databases can offer a snapshot of their federal contracting history, though detailed performance reviews are often internal to the awarding agency.

How does the awarded price compare to market rates for raw gold material during the contract period?

Determining the precise value comparison requires access to the specific market rates for raw gold material on the contract award date and throughout its duration. Gold prices are highly volatile and influenced by global economic factors, currency exchange rates, and market speculation. The contract's firm fixed price structure implies that A-Mark Precious Metals, Inc. assumed the risk of price fluctuations. A thorough analysis would involve comparing the contract's unit price (if discernible) against historical London Bullion Market Association (LBMA) fixings or other relevant benchmarks for the period, accounting for any premiums or discounts specific to government procurement.

What are the primary risks associated with this contract for the government?

The primary risks for the government in this contract revolve around the inherent volatility of the gold market. Despite the firm fixed price, significant market shifts could impact the long-term value proposition if the initial pricing did not adequately account for potential future price surges. Supply chain disruptions, though less likely for a commodity like gold, could also pose a risk. Furthermore, the concentration of award to a single entity, even if competitively selected, introduces a dependency. Ensuring consistent quality and adherence to specifications by the contractor is also a standard risk in any material procurement.

How effective is the United States Mint in managing its raw material procurement contracts?

The effectiveness of the U.S. Mint in managing raw material procurement contracts can be assessed through several lenses. Their consistent need for precious metals suggests a functional, albeit potentially costly, procurement process. The use of competitive bidding, as indicated here, points towards an effort to achieve value for money. However, without detailed performance reports or audits specific to this contract, a definitive judgment on effectiveness is difficult. Factors such as on-time delivery, material quality, and cost control relative to market benchmarks would be key indicators of success.

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

Historical spending patterns for raw gold material by the U.S. Mint would likely show significant fluctuations tied to minting schedules, coin production targets, and prevailing gold prices. The Mint procures gold for various purposes, including American Eagle bullion coins, commemorative coins, and potentially for maintaining strategic reserves. Analyzing past contract awards, their values, durations, and the contractors involved would reveal trends in volume and expenditure. This specific $17.05 million contract represents a portion of that historical spending, and understanding its context within broader trends requires a review of multiple years of procurement data.

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: 3

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: $17,048,420

Exercised Options: $17,048,420

Current Obligation: $17,048,420

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: TMHQ10C0040

IDV Type: IDC

Timeline