Treasury's $70M contract for precious metals fabrication awarded to A-Mark Precious Metals, Inc. in 2009

Contract Overview

Contract Amount: $70,053,632 ($70.1M)

Contractor: A-Mark Precious Metals, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2009-12-04

End Date: 2009-12-31

Contract Duration: 27 days

Daily Burn Rate: $2.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDE 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 $70.1 million to A-MARK PRECIOUS METALS, INC. for work described as: PROVIDE RAW GOLD MATERIAL Key points: 1. The contract value represents a significant investment in precious metals fabrication for the U.S. Mint. 2. Competition dynamics for this contract are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on the nature of precious metals and fabrication services. 4. Performance context is considered within the broader scope of U.S. Mint operations. 5. The contract falls within the 'Other Miscellaneous Fabricated Metal Product Manufacturing' sector.

Value Assessment

Rating: fair

The awarded amount of $70,005,361.61 for precious metals fabrication is substantial. Benchmarking this against similar contracts is challenging due to the specialized nature of U.S. Mint requirements. However, the fixed-price nature suggests an attempt to control costs upfront. Further analysis would require detailed cost breakdowns and comparisons to market rates for equivalent fabrication services and precious metal sourcing.

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 were likely considered. The presence of 3 bidders suggests a moderate level of competition. While full and open competition is generally favorable for price discovery, the specific expertise required for precious metals fabrication might limit the pool of truly competitive firms.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages competitive pricing and potentially leads to better value for the government's investment in precious metals fabrication.

Public Impact

The primary beneficiary is the United States Mint, which receives fabricated precious metals for its operations, potentially including coinage or other official products. The services delivered involve the specialized fabrication of precious metals, requiring specific expertise and handling. The geographic impact is primarily national, supporting the U.S. Mint's operations across the country. Workforce implications may include specialized manufacturing and fabrication roles within the awarded contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in precious metals markets impacting overall cost-effectiveness.
Dependence on a single contractor for a critical fabrication service could pose supply chain risks.
Ensuring consistent quality and security in handling high-value precious metals.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Fixed-price contract type helps to establish cost certainty for the government.
Contractor has a track record, indicated by the award itself, implying some level of qualification.

Sector Analysis

The contract falls under the 'All Other Miscellaneous Fabricated Metal Product Manufacturing' sector, which encompasses a wide range of metal product fabrication. The market for precious metals fabrication is specialized, often involving high security and precision. Comparable spending benchmarks are difficult to establish without more specific details on the type and quantity of precious metals processed. The U.S. Mint's demand for such services is unique due to its governmental role and the intrinsic value of the materials.

Small Business Impact

There is no indication that this contract was a small business set-aside, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of precious metals fabrication often requires specialized facilities and expertise that may be concentrated among larger, more established firms. Therefore, the direct impact on the small business ecosystem for this specific contract appears limited.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Mint's contracting officers and program managers. Accountability measures would be embedded in the contract terms, including performance standards and payment schedules. Transparency is generally maintained through contract award databases, though detailed operational oversight specifics are usually internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

U.S. Mint Operations
Precious Metals Management
Government Procurement of Specialized Manufacturing

Risk Flags

Precious Metals Market Volatility
Specialized Fabrication Expertise Required
High-Value Material Security

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $70.1 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 $70.1 million.

What is the period of performance?

Start: 2009-12-04. End: 2009-12-31.

What is the historical spending pattern for precious metals fabrication by the U.S. Mint?

Historical spending data for precious metals fabrication by the U.S. Mint is not readily available in a consolidated public format. However, the U.S. Mint has a long-standing requirement for fabricating precious metals, primarily for circulating coinage, commemorative coins, and bullion products. Spending in this area would fluctuate based on production demands, market prices of precious metals, and the specific types of products being manufactured. The $70 million awarded to A-Mark Precious Metals in 2009 represents a significant single contract, but the Mint likely engages in multiple, smaller contracts or internal processes for its ongoing fabrication needs. Analyzing historical spending would require a deep dive into the Mint's annual reports and procurement records over several fiscal years to identify trends and significant investments in fabrication services.

How does the pricing of this contract compare to market rates for precious metals fabrication?

Directly comparing the pricing of this $70 million contract to current market rates for precious metals fabrication is challenging without specific details on the services rendered and the types/quantities of precious metals involved. The contract was awarded in 2009, and market conditions, labor costs, and fabrication technologies have evolved since then. Furthermore, the U.S. Mint's requirements may include unique specifications related to security, purity, and precision that differ from standard commercial fabrication. A-Mark Precious Metals, Inc. is a known entity in the precious metals industry, suggesting they possess the necessary capabilities. To perform a robust comparison, one would need to benchmark the contract's unit costs (if discernible) against contemporary bids from other specialized fabricators for similar work, considering the precious metal content and the complexity of the fabrication process.

What is A-Mark Precious Metals, Inc.'s track record with government contracts, particularly with the U.S. Mint?

A-Mark Precious Metals, Inc. has a history of engaging with government entities, including the U.S. Mint. The award of this $70 million contract in 2009 indicates a prior relationship and demonstrated capability to meet the Mint's requirements. While this specific contract is a significant data point, a comprehensive assessment of their track record would involve reviewing other contracts they may have held with the U.S. Mint or other federal agencies. This would include examining past performance evaluations, any instances of contract disputes or terminations, and the overall volume and nature of their government business. Their continued presence in the precious metals market suggests a generally positive operational history, but specific government contract performance details are often proprietary or require detailed database searches.

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

The key risks associated with this contract for the U.S. Mint primarily revolve around the inherent volatility of precious metals markets and the specialized nature of fabrication. Market price fluctuations for gold, silver, platinum, etc., can impact the overall cost and value of the materials being fabricated, even under a fixed-price contract if material sourcing is variable. There's also a risk related to the security and handling of high-value precious metals; any loss or damage during fabrication would be a significant financial and operational concern. Furthermore, reliance on a single contractor for a critical function like fabrication introduces supply chain risk. Ensuring the contractor maintains the highest standards of quality, security, and ethical sourcing throughout the contract duration is paramount to mitigating these risks.

How does the competition level (3 bidders) impact the value for taxpayers?

Having three bidders for this contract suggests a moderate level of competition. While more bidders generally lead to more competitive pricing, three is often considered a sufficient number to drive down costs and encourage efficiency, especially in a specialized field where the number of qualified firms might be limited. This level of competition likely prevented excessively high bids and encouraged A-Mark Precious Metals, Inc. to offer a competitive price to secure the contract. For taxpayers, this means the government likely secured the fabrication services at a more reasonable cost than if it were a sole-source or very limited competition scenario. However, a deeper analysis would involve understanding if these three bidders represented the full spectrum of capable firms or if the market could have supported more robust competition.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › All Other Miscellaneous Fabricated Metal Product Manufacturing

Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

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: $70,053,632

Exercised Options: $70,053,632

Current Obligation: $70,053,632

Timeline