Treasury's Mint awarded $33.8M for copper processing, with 2 bidders competing for the fixed-price contract

Contract Overview

Contract Amount: $33,876,185 ($33.9M)

Contractor: PMX Industries, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2007-03-20

End Date: 2007-09-30

Contract Duration: 194 days

Daily Burn Rate: $174.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: BASE METAL REFINERY

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52404

State: Iowa Government Spending

Plain-Language Summary

Department of the Treasury obligated $33.9 million to PMX INDUSTRIES, INC. for work described as: BASE METAL REFINERY Key points: 1. The contract's fixed-price structure with economic price adjustment offers some protection against market volatility. 2. With two bidders, competition was present but may not have driven the lowest possible price. 3. The short duration of 194 days suggests a focused need for specific copper processing services. 4. The contract falls under the 'Other' sector due to its specific industrial processing nature. 5. Performance risk appears moderate given the fixed-price nature and defined scope. 6. The award was a delivery order, indicating it was part of a larger potential agreement.

Value Assessment

Rating: fair

Benchmarking the value of this specific copper processing contract is challenging without more comparable data. The fixed-price with economic price adjustment (FPEPA) contract type can sometimes lead to higher initial prices compared to firm-fixed-price contracts, as it accounts for potential fluctuations in raw material costs. However, it also provides stability for the contractor. The total award amount of $33.8 million for a 194-day period suggests a significant per diem cost, but without knowing the exact volume and specifications of the copper processed, a precise value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order, indicating that multiple vendors were solicited. However, with only two bidders, the level of competition was limited. Limited competition can sometimes result in prices that are not as aggressively negotiated as they might be in a more robustly competed scenario. The specific nature of the required copper processing may have narrowed the field of qualified bidders.

Taxpayer Impact: With only two bidders, taxpayers may have missed out on potential cost savings that could have been achieved through broader competition. The government secured a vendor, but the price may not reflect the most competitive market rate.

Public Impact

The United States Mint benefits from the specialized copper processing services required for its operations. The contract supports the production of essential components for coinage or other minting activities. The geographic impact is primarily within the United States, supporting domestic industrial capabilities. The contract likely supports a specialized workforce within the metals processing industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher-than-optimal price for taxpayers.
The economic price adjustment clause introduces potential for cost increases if market prices for copper rise significantly.
The short contract duration might indicate a reactive procurement rather than strategic long-term planning.

Positive Signals

The contract was competitively awarded, ensuring at least some level of market vetting.
The fixed-price component provides a baseline cost control measure.
The award was made to PMX INDUSTRIES, INC., a known entity in industrial manufacturing.

Sector Analysis

The industrial manufacturing sector encompasses a wide range of activities, including metal processing. This contract for copper rolling, drawing, and extruding falls within this broad category. The market for specialized metal processing services can be niche, with a limited number of firms possessing the specific capabilities and certifications required for government contracts. Comparable spending benchmarks are difficult to establish without more specific details on the volume and type of copper processed, but the award amount suggests a significant undertaking within this specialized industrial segment.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The prime contractor, PMX INDUSTRIES, INC., is likely a larger entity capable of handling this scale of work.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury and the United States Mint's internal procurement and financial management systems. As a delivery order under a larger potential agreement, its execution would be monitored by contracting officers. Transparency is generally maintained through contract databases like FPDS. Specific Inspector General jurisdiction would depend on the nature of any potential issues, but the Treasury Inspector General for Tax Administration (TIGTA) or the Government Accountability Office (GAO) could be involved in audits or investigations.

Related Government Programs

United States Mint Operations
Industrial Materials Procurement
Metals Manufacturing Contracts
Treasury Department Supply Chain

Risk Flags

Limited Competition
Economic Price Adjustment Clause
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $33.9 million to PMX INDUSTRIES, INC.. BASE METAL REFINERY

Who is the contractor on this award?

The obligated recipient is PMX INDUSTRIES, 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 $33.9 million.

What is the period of performance?

Start: 2007-03-20. End: 2007-09-30.

What is the track record of PMX INDUSTRIES, INC. with federal contracts, particularly for metal processing?

PMX INDUSTRIES, INC. has a history of receiving federal contracts, primarily within the industrial manufacturing and materials sector. While specific details on their track record for copper processing require deeper analysis of contract databases, their award for this $33.8 million contract by the U.S. Mint suggests they possess the necessary capabilities and have met the government's requirements. Further investigation into past performance reviews, any past disputes, or contract modifications would provide a more comprehensive understanding of their reliability and quality of service in similar federal engagements.

How does the $33.8 million award compare to similar copper processing contracts awarded by the government?

Direct comparisons for this specific contract are challenging due to the unique nature of copper rolling, drawing, and extruding services, and the limited public data on contract specifics like volume and quality. However, the award amount of $33.8 million for a 194-day period indicates a substantial per diem cost. To benchmark effectively, one would need to identify contracts with similar scopes of work, quantities of material processed, and contract types (e.g., fixed-price with economic price adjustment). Without such comparable data, assessing whether this represents optimal value for money is difficult. It suggests a significant requirement by the U.S. Mint.

What are the primary risks associated with this contract for the U.S. Mint?

The primary risks associated with this contract include potential price escalation due to the economic price adjustment clause, which could increase costs if copper market prices surge. Another risk is performance-related; if PMX INDUSTRIES, INC. fails to meet the quality or delivery specifications for the copper processing, it could disrupt the Mint's production schedules. Given the limited competition (two bidders), there's also a risk that the price negotiated may not be the absolute lowest achievable. Finally, the short duration might imply a need for rapid execution, increasing the risk of rushed work or unforeseen logistical challenges.

How effective is the fixed-price with economic price adjustment (FPEPA) contract type in managing costs for specialized industrial materials?

The FPEPA contract type aims to balance cost control with market volatility. For specialized industrial materials like copper, where prices can fluctuate, the economic price adjustment allows the contractor to pass on documented increases in raw material costs, protecting their profit margin and ensuring supply. The fixed-price component, however, still applies to labor and overhead, providing some cost certainty for the government. Its effectiveness hinges on the clarity of the adjustment formula and the government's ability to monitor market prices. It can be more effective than a firm-fixed-price contract in volatile markets but may lead to higher initial bids than a purely fixed-price arrangement.

What is the historical spending pattern for copper processing or similar materials by the U.S. Mint?

Analyzing historical spending patterns for specific materials like copper processing by the U.S. Mint requires access to detailed procurement data over multiple fiscal years. This single award of $33.8 million for copper rolling, drawing, and extruding provides a snapshot for a specific period (2007). To understand historical patterns, one would need to examine trends in the volume of materials procured, the types of processing services sought, the number of bidders on similar contracts, and the average award values over time. This would reveal whether spending on such services is increasing, decreasing, or remaining stable, and how competitive the market has been historically.

What are the implications of awarding a delivery order versus a base contract for this type of service?

Awarding a delivery order (DO) typically means this specific procurement is part of a larger, pre-existing contract vehicle, often a Multiple Award Indefinite Delivery/Indefinite Quantity (IDIQ) contract or a similar framework. This approach allows the government to procure goods or services incrementally as needed, offering flexibility and potentially faster acquisition. For the U.S. Mint, it suggests they anticipated a recurring need for copper processing services and established a mechanism to order them efficiently. The implications include streamlined ordering, potentially pre-negotiated terms and pricing (though subject to competition for the DO itself), and the ability to adapt to changing requirements within the scope of the parent contract.

Industry Classification

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

Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Poongsan Holdings Corporation (UEI: 687755603)

Address: 5300 WILLOW CREEK DR SW, CEDAR RAPIDS, IA, 02

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $33,876,185

Exercised Options: $33,876,185

Current Obligation: $33,876,185

Parent Contract

Parent Award PIID: TMK0202

IDV Type: IDC

Timeline