Treasury's $24M contract for precious metals awarded to Sunshine Minting Inc. amid limited competition

Contract Overview

Contract Amount: $24,033,980 ($24.0M)

Contractor: Sunshine Minting Inc

Awarding Agency: Department of the Treasury

Start Date: 2011-09-13

End Date: 2011-09-23

Contract Duration: 10 days

Daily Burn Rate: $2.4M/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDE RAW SILVER

Place of Performance

Location: COEUR D ALENE, KOOTENAI County, IDAHO, 83815

State: Idaho Government Spending

Plain-Language Summary

Department of the Treasury obligated $24.0 million to SUNSHINE MINTING INC for work described as: PROVIDE RAW SILVER Key points: 1. Value for money appears fair given the fixed-price nature and short duration, but detailed cost breakdowns are unavailable. 2. Competition dynamics were limited, with only two bidders, potentially impacting price discovery. 3. Risk indicators are moderate, primarily related to the reliance on a single supplier for a critical component. 4. Performance context suggests a routine procurement for precious metal products. 5. Sector positioning places this contract within the broader wholesale trade of precious metals and jewelry.

Value Assessment

Rating: fair

The contract value of $24 million for a 10-day period suggests a significant per-unit cost for precious metals. Benchmarking against market rates for similar precious metal acquisitions is difficult without specific product details. However, the fixed-price nature provides some cost certainty for the government. The short duration implies a focused need, potentially mitigating long-term price risks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was competed under Simplified Acquisition Procedures (SAP), which typically involves fewer bidders than full and open competition. With only two bidders, the level of competition was limited. This suggests that while some price comparison was possible, the government may not have achieved the most competitive pricing achievable through a broader solicitation.

Taxpayer Impact: Limited competition can lead to higher prices for taxpayers compared to scenarios with multiple, robust bids. The government may have paid a premium due to the restricted bidder pool.

Public Impact

The United States Mint benefits from the acquisition of precious metals for its coinage and medal programs. Services delivered include the supply of precious metals, essential for mint operations. Geographic impact is primarily national, supporting the US Mint's operations across the country. Workforce implications are minimal, likely involving existing personnel within the US Mint and the contractor's operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
Lack of detailed cost breakdowns hinders a thorough value-for-money assessment.
Reliance on a limited number of suppliers could pose supply chain risks.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Short contract duration minimizes long-term exposure to market price fluctuations.
Procurement falls under established government purchasing procedures.

Sector Analysis

This contract operates within the precious metals wholesale sector, a niche market characterized by fluctuating commodity prices and specialized suppliers. The US Mint is a significant consumer of precious metals for its bullion and commemorative coin programs. Comparable spending benchmarks are difficult to establish due to the proprietary nature of specific metal sourcing and the unique requirements of mint operations.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of precious metal procurement, it is likely that the primary suppliers are larger, specialized firms. Subcontracting implications are not detailed, but it is possible that smaller businesses could be involved in ancillary services or material processing.

Oversight & Accountability

Oversight is likely managed by the United States Mint's contracting officers and program managers. Accountability measures would be tied to the terms of the fixed-price contract, including delivery schedules and quality specifications. Transparency is limited by the nature of SAP procurements, which do not require the same level of public disclosure as larger, full-and-open competitions.

Related Government Programs

US Mint Bullion Programs
Precious Metals Procurement
Government Commemorative Coin Programs

Risk Flags

Limited Competition
Lack of Detailed Cost Breakdown
Potential for Price Inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $24.0 million to SUNSHINE MINTING INC. PROVIDE RAW SILVER

Who is the contractor on this award?

The obligated recipient is SUNSHINE MINTING 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 $24.0 million.

What is the period of performance?

Start: 2011-09-13. End: 2011-09-23.

What is the specific type and quantity of precious metals procured under this contract?

The provided data does not specify the exact type or quantity of precious metals. The contract is categorized under NAICS code 423940, which covers 'Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers.' This broad classification indicates the procurement is for raw or semi-finished precious metals, likely gold, silver, or platinum, intended for use in minting coins, medals, or other numismatic products. Without further details, the precise composition and volume remain unknown, making a granular cost analysis impossible.

How does the awarded price compare to historical spending for similar precious metal acquisitions by the US Mint?

Direct historical spending comparisons for this specific contract are not readily available from the provided data. The contract value is $24,033,980.24. To perform a meaningful comparison, one would need access to historical contract data for similar precious metal types, quantities, and market conditions. Factors such as the fluctuating global prices of gold, silver, and platinum significantly impact acquisition costs. A comprehensive analysis would require examining past solicitations and awards for comparable materials over relevant periods to identify trends and assess whether this award represents a favorable or unfavorable price point relative to market dynamics and previous government purchases.

What are the primary risks associated with awarding a contract of this nature to a limited number of bidders?

The primary risks associated with awarding a contract for precious metals to a limited number of bidders, as seen with this contract (2 bidders), include potential price inflation, reduced innovation, and supply chain vulnerability. With fewer competitors, the government may not secure the most competitive pricing available in the market. This limited competition can also disincentivize suppliers from offering their best terms. Furthermore, over-reliance on a small pool of suppliers can create significant risks if one supplier faces production issues, financial instability, or geopolitical disruptions, potentially leading to shortages or delays in critical material acquisition for the US Mint.

What is the track record of Sunshine Minting Inc. in fulfilling government contracts, particularly for precious metals?

The provided data does not include specific details on Sunshine Minting Inc.'s track record with government contracts beyond this award. To assess their performance, one would need to review their past contract history, including on-time delivery rates, quality compliance, and any past performance evaluations or disputes with federal agencies. Information regarding their experience specifically with large-scale precious metal procurement for entities like the US Mint would be crucial. A thorough review would involve searching federal procurement databases and past performance information repositories.

How does the Simplified Acquisition Procedures (SAP) process impact the transparency and cost-effectiveness of this procurement?

The use of Simplified Acquisition Procedures (SAP) for this $24 million contract, while intended to streamline procurement for purchases below certain thresholds (which have since been updated), can impact transparency and cost-effectiveness. SAP generally involves less stringent documentation and competition requirements compared to full and open competition. This can lead to quicker awards but may limit the number of potential bidders and reduce the visibility into the pricing structure and negotiation process. While SAP aims for efficiency, the reduced competition inherent in its application could potentially lead to higher costs for taxpayers if not managed carefully, as the government might not achieve the full benefit of a broad market solicitation.

Industry Classification

NAICS: Wholesale Trade › Miscellaneous Durable Goods Merchant Wholesalers › Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers

Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7600 N MINERAL DR STE 700, COEUR D ALENE, ID, 01

Business Categories: Category Business, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,033,980

Exercised Options: $24,033,980

Current Obligation: $24,033,980

Timeline