Treasury's Mint awarded $28.2M contract for gold material to A-Mark Precious Metals, Inc

Contract Overview

Contract Amount: $28,244,625 ($28.2M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2011-05-10

End Date: 2011-05-16

Contract Duration: 6 days

Daily Burn Rate: $4.7M/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 $28.2 million to A-MARK PRECIOUS METALS, INC. for work described as: RAW GOLD MATERIAL Key points: 1. Contract value of $28.2M for raw gold material suggests significant demand for precious metals. 2. The contract was awarded under full and open competition, indicating a competitive market. 3. A single delivery order was issued, implying a focused and specific need for the material. 4. The fixed-price contract type aims to control costs for the government. 5. The duration of 6 days for the delivery order points to an urgent or short-term requirement. 6. The award to A-Mark Precious Metals, Inc. positions them as a key supplier to the U.S. Mint.

Value Assessment

Rating: good

The contract value of $28.2 million for raw gold material appears reasonable given the commodity's market price fluctuations and the scale of operations for the U.S. Mint. Benchmarking against similar contracts for precious metals would provide a more precise value-for-money assessment. However, the fixed-price nature of the contract suggests an effort to lock in costs, which is a positive indicator for fiscal responsibility. The relatively small number of delivery orders (one) against the total contract value might indicate efficient procurement or a highly specific, one-time need.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. The fact that there were 3 bidders indicates a healthy level of competition for this type of specialized material. This competitive environment is generally favorable for price discovery, as it encourages bidders to offer their most competitive pricing to secure the award. The presence of multiple bidders suggests that the market for raw gold material is accessible to qualified suppliers.

Taxpayer Impact: The full and open competition likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award. It ensures that the government is not overpaying due to a lack of market engagement.

Public Impact

The primary beneficiary is the United States Mint, which receives the necessary raw gold material for its operations, likely for coinage or bullion production. The service delivered is the provision of high-quality raw gold material, essential for minting operations. The geographic impact is primarily within the United States, specifically where the Mint processes the material. Workforce implications are indirect, supporting jobs within the precious metals supply chain and at the Mint itself.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential price volatility of gold commodity impacting the long-term value of the contract.
Dependence on a single supplier for a critical raw material could pose a risk if not managed carefully.
Ensuring the ethical sourcing and chain of custody for the raw gold material.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Fixed-price contract type helps mitigate cost overruns.
The U.S. Mint's established procurement processes likely ensure quality and reliability of supply.

Sector Analysis

The contract falls within the broader 'Metals and Metal Products' sector, specifically dealing with nonferrous metals. The market for precious metals like gold is global and subject to significant price volatility driven by economic factors, investor demand, and geopolitical events. The U.S. Mint is a major consumer of gold for its bullion and commemorative coin programs. Comparable spending benchmarks would involve analyzing other government contracts for precious metals or large-scale industrial purchases of gold.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of the commodity (raw gold material) and the likely scale of the award, it is probable that larger, specialized suppliers are the primary participants. There is no explicit information regarding subcontracting plans for small businesses, but it is unlikely to be a significant component given the direct commodity nature of the purchase.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Mint's contracting officers and program managers. Accountability measures are embedded in the contract terms, including specifications for material quality and delivery schedules. Transparency is facilitated through public contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the procurement or fulfillment of the contract.

Related Government Programs

U.S. Mint Bullion Coin Programs
Federal Gold Reserves Management
Precious Metals Procurement
Commodity Supply Contracts

Risk Flags

Potential for price volatility in the gold market.
Dependence on a single supplier for critical material.
Ensuring ethical sourcing and chain of custody.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $28.2 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 $28.2 million.

What is the period of performance?

Start: 2011-05-10. End: 2011-05-16.

What is the historical spending pattern of the U.S. Mint for raw gold material over the past five years?

Analyzing the historical spending patterns of the U.S. Mint for raw gold material requires accessing detailed procurement data over several fiscal years. While this specific contract represents a $28.2 million award in 2011, understanding the Mint's broader procurement trends involves looking at the frequency, value, and types of contracts awarded for gold. Factors such as the Mint's production targets for bullion coins (like American Eagles) and commemorative issues, as well as market conditions influencing gold prices, would dictate spending. A comprehensive review might reveal fluctuations in annual spending, shifts in awarded contractors, and the impact of gold price volatility on the total value of procurement actions. For instance, periods of high gold prices might see lower physical volumes purchased for the same dollar amount, or vice versa. Without access to a multi-year database filtered for 'raw gold material' specifically for the Mint, a precise historical spending pattern cannot be detailed here, but it would likely show variability tied to market prices and production demands.

How does the price paid per ounce of gold in this contract compare to the spot market price at the time of award?

To compare the price paid per ounce in this contract to the spot market price, we would need to know the exact quantity (in ounces) of raw gold material procured under this $28.2 million contract. The contract details provided do not specify the quantity. Assuming the contract was for a specific weight of gold, one could divide the total contract value ($28,244,625.49) by the number of ounces to derive an average price per ounce. This derived price would then be compared against the prevailing spot market price of gold on or around the award date (May 10, 2011). For context, gold prices in early May 2011 were trading at historically high levels, often exceeding $1,500 per ounce. A detailed analysis would require the precise weight of gold purchased to determine if the contract price was at, above, or below the market rate, considering potential premiums for refining, delivery, and quality assurance.

What are the specific quality standards and assay requirements for the raw gold material under this contract?

The contract details specify the material as 'Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and Extruding,' and the award is for 'RAW GOLD MATERIAL.' While the exact quality standards and assay requirements are not explicitly listed in the provided summary data, government contracts for precious metals typically include stringent specifications. These usually mandate a minimum purity level (e.g., .9999 fine gold), adherence to specific industry standards (like London Bullion Market Association - LBMA - Good Delivery standards), and detailed assaying procedures. The contract likely references specific technical specifications or performance work statements that outline the required purity, acceptable impurities, physical form (e.g., bars, grain), and the methods for verification, including third-party assaying. Failure to meet these standards would typically result in rejection of the material and potential penalties for the contractor.

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

A-Mark Precious Metals, Inc. is a well-established entity in the precious metals industry. Information from public contract databases indicates that A-Mark has secured various contracts with government agencies, including the U.S. Mint, for the supply of precious metals. Their track record suggests experience in meeting the demanding specifications and delivery requirements of government procurement. The award of this $28.2 million contract by the U.S. Mint, a sophisticated buyer of precious metals, implies that A-Mark met the necessary qualifications, demonstrated financial stability, and offered competitive terms. Further due diligence would involve examining past performance reviews, any history of contract disputes or terminations, and the overall volume and types of government contracts they have successfully executed.

What are the potential risks associated with relying on a single delivery order for a large quantity of raw gold material?

Relying on a single delivery order for a substantial quantity of raw gold material, as indicated by the $28.2 million award, presents several potential risks. Firstly, there's the risk of supply chain disruption; if A-Mark Precious Metals, Inc. faces unforeseen issues (e.g., logistical problems, internal operational failures, or issues with their own upstream suppliers), the delivery could be delayed or jeopardized, impacting the U.S. Mint's production schedule. Secondly, if the market price of gold experiences a significant downturn after the contract price is set but before delivery, the Mint might be paying a premium relative to the then-current spot price, although the fixed-price nature aims to mitigate this risk for the government. Thirdly, the concentration of procurement in a single order might limit the Mint's ability to leverage market fluctuations or negotiate better terms if multiple, smaller orders were strategically placed over time. However, a single, well-defined order can also streamline administrative processes and ensure a specific quantity is secured at a negotiated price.

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: $28,244,625

Exercised Options: $28,244,625

Current Obligation: $28,244,625

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TMHQ10C0040

IDV Type: IDC

Timeline