Treasury Spends $20M on Raw Silver from Sunshine Minting Inc. Under SAP Competition
Contract Overview
Contract Amount: $19,994,755 ($20.0M)
Contractor: Sunshine Minting Inc
Awarding Agency: Department of the Treasury
Start Date: 2012-12-11
End Date: 2012-12-14
Contract Duration: 3 days
Daily Burn Rate: $6.7M/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, 83814
State: Idaho Government Spending
Plain-Language Summary
Department of the Treasury obligated $20.0 million to SUNSHINE MINTING INC for work described as: PROVIDE RAW SILVER Key points: 1. Significant expenditure on a commodity with volatile pricing. 2. Competition was conducted under Simplified Acquisition Procedures (SAP), potentially limiting broad market engagement. 3. Risk of price fluctuations impacting the total value of the contract. 4. Sector is wholesale trade of precious metals.
Value Assessment
Rating: fair
The contract value of $19.99M for raw silver is substantial. Benchmarking against market prices at the time of award is crucial for assessing value, as silver prices can fluctuate significantly.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was competed under SAP, which is intended for smaller purchases. This method may not have achieved the best possible price discovery compared to full and open competition for such a large value.
Taxpayer Impact: The use of SAP for a $20M purchase raises questions about maximizing taxpayer value and ensuring the most competitive pricing was obtained.
Public Impact
Taxpayers may be exposed to price volatility of silver. The use of SAP for a large purchase could mean less competitive pricing. The contract supports a specific supplier for a key commodity.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- SAP used for large value purchase
- Commodity price volatility risk
- Limited competition details
Positive Signals
- Clear contract award
- Defined supplier
Sector Analysis
This contract falls within the wholesale trade of precious metals. Spending benchmarks in this sector are highly dependent on market conditions and the specific type of precious metal.
Small Business Impact
No specific information is provided regarding small business participation in this contract. The supplier, Sunshine Minting Inc., is likely a larger entity given the contract value.
Oversight & Accountability
Oversight would focus on ensuring the procurement process followed SAP guidelines and that the price paid was reasonable given market conditions at the time of award.
Related Government Programs
- Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers
- Department of the Treasury Contracting
- United States Mint Programs
Risk Flags
- Potential for overpayment due to commodity price volatility.
- Use of SAP for a large value contract may indicate suboptimal competition.
- Lack of transparency on the specific competition details.
- Limited information on the justification for sole-source or limited competition.
Tags
jewelry-watch-precious-stone-and-preciou, department-of-the-treasury, id, po, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $20.0 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 $20.0 million.
What is the period of performance?
Start: 2012-12-11. End: 2012-12-14.
Was the use of SAP appropriate for a $20M raw silver purchase, and did it result in fair market pricing?
The use of SAP for a $20M purchase is unusual, as SAP is typically for acquisitions under the simplified acquisition threshold. While it allows for faster procurement, it may limit competition and price discovery. A thorough review of the justification for using SAP and a comparison of the awarded price against market benchmarks at the time of award are necessary to determine if fair market pricing was achieved.
What is the potential financial risk to taxpayers due to silver price volatility over the contract period?
The primary financial risk to taxpayers stems from the inherent volatility of silver prices. If the market price of silver increases significantly after the contract award, the government may have acquired the silver at a price below the prevailing market rate, representing a potential loss. Conversely, if prices fall, the government may have overpaid relative to the spot market.
How effective was the competition under SAP in securing the best value for this raw silver procurement?
The effectiveness of SAP competition for this $20M contract is questionable. SAP is designed for smaller purchases and may not attract the widest range of bidders or achieve the most robust price discovery compared to full and open competition. Without details on the bidding process and the number of offers received, it's difficult to definitively assess if the best value was secured for the taxpayer.
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: $19,994,755
Exercised Options: $19,994,755
Current Obligation: $19,994,755
Timeline
Start Date: 2012-12-11
Current End Date: 2012-12-14
Potential End Date: 2012-12-14 00:00:00
Last Modified: 2012-12-11
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