Treasury Spends $16.4M on Raw Gold Material from A-Mark Precious Metals
Contract Overview
Contract Amount: $16,376,155 ($16.4M)
Contractor: A-Mark Precious Metals, Inc.
Awarding Agency: Department of the Treasury
Start Date: 2009-03-04
End Date: 2009-03-13
Contract Duration: 9 days
Daily Burn Rate: $1.8M/day
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: PROVIDE RAW GOLD MATERIAL
Place of Performance
Location: SANTA MONICA, LOS ANGELES County, CALIFORNIA, 90401
Plain-Language Summary
Department of the Treasury obligated $16.4 million to A-MARK PRECIOUS METALS, INC. for work described as: PROVIDE RAW GOLD MATERIAL Key points: 1. Significant expenditure on a key commodity. 2. Limited competition likely due to specialized nature of raw material sourcing. 3. Potential price volatility risk associated with gold market fluctuations. 4. Fabricated metal products sector, with specific focus on precious metals.
Value Assessment
Rating: questionable
The contract value of $16.4 million for raw gold material is substantial. Without specific unit cost data or benchmarks for raw gold procurement by government entities, it's difficult to definitively assess pricing fairness. The fixed-price nature suggests an attempt to control costs, but market volatility could still impact value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was likely awarded through a limited competition process, as sourcing raw precious metals often involves specialized suppliers with established market access. This limited competition may have impacted price discovery, potentially leading to less competitive pricing than a broader solicitation.
Taxpayer Impact: Taxpayer funds are directly used for the acquisition of raw materials, the cost of which is subject to global commodity market fluctuations. The effectiveness of this procurement in securing materials at a reasonable price impacts the overall value for taxpayer investment.
Public Impact
Direct use of taxpayer funds for commodity acquisition. Potential impact on national reserves or strategic material availability. Price of gold directly influences the cost to taxpayers. Government reliance on private sector for essential raw materials.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of transparency in limited competition.
- Exposure to volatile gold market prices.
- Potential for overpayment without clear benchmarks.
Positive Signals
- Secured essential raw material for mint operations.
- Firm fixed price contract offers cost certainty.
Sector Analysis
This contract falls within the fabricated metal products manufacturing sector, specifically dealing with precious metals. Government spending in this area is typically related to minting operations, coinage, or strategic reserves. Benchmarks are difficult to establish due to the specialized nature and market-driven pricing of gold.
Small Business Impact
The contract was awarded to A-Mark Precious Metals, Inc., a known entity in the precious metals market. There is no indication in the provided data whether small businesses were involved as subcontractors or if this procurement specifically aimed to support small business participation.
Oversight & Accountability
Oversight of this contract would involve monitoring the delivery of raw gold material and ensuring compliance with the firm fixed price terms. Accountability rests with the Department of the Treasury and the United States Mint to manage the procurement process effectively and safeguard taxpayer funds against market risks.
Related Government Programs
- All Other Miscellaneous Fabricated Metal Product Manufacturing
- Department of the Treasury Contracting
- United States Mint Programs
Risk Flags
- Lack of clear justification for limited competition.
- Significant exposure to commodity price risk.
- Potential for price not reflecting true market value.
- Limited transparency in the procurement process.
- Dependence on a single supplier for critical material.
Tags
all-other-miscellaneous-fabricated-metal, department-of-the-treasury, ca, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $16.4 million to A-MARK PRECIOUS METALS, INC.. PROVIDE 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 $16.4 million.
What is the period of performance?
Start: 2009-03-04. End: 2009-03-13.
What was the rationale for limiting competition for this raw gold material procurement?
Limiting competition for raw gold material procurement is often driven by the specialized nature of the market, requiring suppliers with established access to global gold markets, robust security protocols, and the financial capacity to handle large transactions. The government may have determined that only a few entities could meet these stringent requirements, thus justifying a limited solicitation to ensure reliable supply and quality.
How is the government mitigating the risk of gold price volatility impacting the contract's value?
The contract utilizes a 'firm fixed price' structure, which aims to lock in the price at the time of award, thereby transferring the risk of price fluctuations to the contractor. However, if the market price of gold significantly deviates from the contracted price, the government might either overpay if prices rise or potentially miss out on savings if prices fall, depending on the contract's specific terms and the timing of material delivery.
What is the expected effectiveness of this procurement in supporting the United States Mint's objectives?
The effectiveness hinges on the United States Mint's ability to acquire the necessary raw gold material at a competitive price to fulfill its production mandates, whether for circulating coinage, bullion, or other official products. If A-Mark Precious Metals, Inc. delivers the specified quantity and quality of gold on time and within the agreed-upon fixed price, the procurement is effective in enabling the Mint's operations.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › All Other Miscellaneous Fabricated Metal Product Manufacturing
Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS
Contractor Details
Parent Company: Spectrum Group International Inc. (UEI: 806666475)
Address: 100 WILSHIRE BLVD FL 3, SANTA MONICA, CA, 36
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $16,376,155
Exercised Options: $16,376,155
Current Obligation: $16,376,155
Timeline
Start Date: 2009-03-04
Current End Date: 2009-03-13
Potential End Date: 2009-03-13 00:00:00
Last Modified: 2010-09-20
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