Treasury's $27.6M copper purchase for coinage awarded to Olin Corp. amid limited competition

Contract Overview

Contract Amount: $27,569,105 ($27.6M)

Contractor: Olin Corporation - Winchester

Awarding Agency: Department of the Treasury

Start Date: 2007-05-17

End Date: 2007-09-30

Contract Duration: 136 days

Daily Burn Rate: $202.7K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: PROVIDE BASE METAL FOR CIRCULATING COINAGE

Place of Performance

Location: EAST ALTON, MADISON County, ILLINOIS, 62024

State: Illinois Government Spending

Plain-Language Summary

Department of the Treasury obligated $27.6 million to OLIN CORPORATION - WINCHESTER for work described as: PROVIDE BASE METAL FOR CIRCULATING COINAGE Key points: 1. Value for money assessed against market prices for copper and historical contract performance. 2. Competition dynamics indicate a limited procurement environment for this specific raw material. 3. Risk indicators include potential price volatility for raw materials and single-source reliance. 4. Performance context is tied to the Mint's need for coinage production materials. 5. Sector positioning is within the defense industrial base, supplying critical raw materials.

Value Assessment

Rating: fair

The contract value of $27.6 million for copper rolling, drawing, and extruding needs to be benchmarked against prevailing market prices for copper during the contract period (2007). Without specific unit cost data or comparison to similar contracts for coinage metal, a precise value-for-money assessment is challenging. However, the fixed-price with economic price adjustment (EPA) clause suggests an attempt to mitigate raw material price fluctuations, which can be a reasonable approach for commodity-based contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded as a competitive delivery order, but the specific details of the competition, such as the number of bidders and the solicitation method, are not fully detailed in the provided data. A 'limited' competition suggests that not all potential suppliers were able to participate or were solicited, which could impact price discovery and potentially lead to higher costs compared to a full and open competition.

Taxpayer Impact: Limited competition can mean taxpayers may not have received the lowest possible price for the copper needed for coinage, as the pool of potential suppliers was restricted.

Public Impact

Benefits the United States Mint in its production of circulating coinage. Ensures a supply of essential raw materials for the nation's currency. Impacts the industrial supply chain for metals processing and manufacturing. Supports domestic manufacturing capabilities related to coinage production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if copper prices surge.
Reliance on a single contractor for a critical component of coinage production.
Limited transparency on the specific competitive process and number of bidders.

Positive Signals

Contract awarded to a known entity (Olin Corporation - Winchester) with established manufacturing capabilities.
Use of an economic price adjustment clause to manage commodity price volatility.
Delivery order structure allows for phased procurement based on immediate needs.

Sector Analysis

This contract falls within the broader metals and mining sector, specifically focusing on the processing of copper for industrial use. The market for base metals like copper is global and subject to significant price volatility driven by supply and demand, geopolitical factors, and economic conditions. The United States Mint is a significant consumer of specific metal grades for coinage, and its procurement processes are critical for maintaining currency production.

Small Business Impact

The provided data indicates that small business participation was not a factor in this specific contract (ss: false, sb: false). There is no indication of small business set-asides or subcontracting requirements. Therefore, this contract does not appear to directly benefit or impact the small business ecosystem in this particular instance.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Treasury and the United States Mint's internal procurement and quality assurance processes. Inspector General oversight may be involved if specific concerns or allegations of fraud, waste, or abuse arise. Transparency is generally facilitated through contract databases, but detailed performance metrics and competitive bidding documentation may not always be publicly accessible.

Related Government Programs

United States Mint Coinage Production
Department of the Treasury Raw Material Procurement
Copper Commodity Markets
Industrial Metals Manufacturing

Risk Flags

Limited Competition
Potential Price Volatility (EPA Clause)
Single Source Reliance (Implied by limited bidders)

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $27.6 million to OLIN CORPORATION - WINCHESTER. PROVIDE BASE METAL FOR CIRCULATING COINAGE

Who is the contractor on this award?

The obligated recipient is OLIN CORPORATION - WINCHESTER.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (United States Mint).

What is the total obligated amount?

The obligated amount is $27.6 million.

What is the period of performance?

Start: 2007-05-17. End: 2007-09-30.

What was the specific unit price paid for the copper and how does it compare to the market price at the time of award?

The provided data does not include the specific unit price paid for the copper. The total award amount is $27,569,104.51. To determine the unit price, the quantity of copper procured would be needed. Benchmarking against the market price would require accessing historical LME (London Metal Exchange) or COMEX (Commodity Exchange) copper prices for the period between May 17, 2007, and September 30, 2007, and comparing it to the calculated unit cost. The economic price adjustment (EPA) clause suggests that the final price could fluctuate based on market conditions, making a single fixed unit price comparison potentially misleading without understanding the EPA's application.

How many bids were received for this competitive delivery order, and what were the key evaluation criteria?

The data indicates this was a 'COMPETITIVE DELIVERY ORDER' with 'NO' (number of bidders) listed as 2. This suggests that at least two offers were considered. However, the specific evaluation criteria used to select Olin Corporation - Winchester are not detailed in the provided information. Typically, for such procurements, criteria might include price, technical capability, past performance, and adherence to specifications. The limited number of bidders (2) suggests a potentially constrained market or a specific solicitation approach.

What is Olin Corporation - Winchester's track record with the US Mint for similar raw material contracts?

Olin Corporation, and its Winchester division, has a long history of supplying ammunition and related materials, which often involve metals. While specific details on their track record with the US Mint for copper rolling, drawing, and extruding for coinage are not provided here, their established presence in defense and industrial manufacturing suggests they possess the necessary capabilities. Further investigation into historical contract awards and performance reviews between Olin/Winchester and the US Mint would be required for a comprehensive assessment.

What are the potential risks associated with the economic price adjustment (EPA) clause in this contract?

The primary risk associated with the Economic Price Adjustment (EPA) clause is potential cost overruns for the government if the price of copper increases significantly during the contract period. While EPA is intended to protect both parties from extreme price volatility, it shifts some of the market risk to the buyer. The government could end up paying more than initially anticipated if market prices for copper rise substantially between the time of the order and delivery/completion. Conversely, if prices fall, the government might benefit, but the uncertainty in final cost remains.

How does this contract's value compare to other raw material procurements by the US Mint or other federal agencies for similar metals?

Comparing this $27.6 million contract requires identifying comparable contracts for copper or other base metals used in coinage or other federal applications. Benchmarking would involve looking at the quantity of metal procured, the specific grade and processing required (rolling, drawing, extruding), and the time period. Without access to a broader database of similar federal procurements, it's difficult to definitively state whether this contract represents a particularly high or low value. However, the fixed-price with EPA structure is common for commodity-based procurements.

What is the historical spending trend for copper or similar metals by the US Mint over the past decade?

The provided data only pertains to a single contract from 2007. To analyze historical spending trends for copper or similar metals by the US Mint, a review of contract awards over multiple fiscal years would be necessary. This would involve querying federal procurement databases for contracts awarded by the US Mint for coinage metals, looking at total dollar amounts, quantities, and types of metals. Such an analysis could reveal patterns in demand, pricing strategies, and supplier relationships over time.

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

Address: 427 N SHAMROCK ST, EAST ALTON, IL, 13

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $27,569,105

Exercised Options: $27,569,105

Current Obligation: $27,569,105

Parent Contract

Parent Award PIID: TMK0203

IDV Type: IDC

Timeline