Treasury's Mint awards $24.4M for coinage metal, with a 7.3% premium over benchmarked costs

Contract Overview

Contract Amount: $24,350,759 ($24.4M)

Contractor: Wieland Rolled Products North America, LLC

Awarding Agency: Department of the Treasury

Start Date: 2021-05-03

End Date: 2021-06-05

Contract Duration: 33 days

Daily Burn Rate: $737.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDE STRIP AND METAL FOR CIRCULATING COINAGE.

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40241

State: Kentucky Government Spending

Plain-Language Summary

Department of the Treasury obligated $24.4 million to WIELAND ROLLED PRODUCTS NORTH AMERICA, LLC for work described as: PROVIDE STRIP AND METAL FOR CIRCULATING COINAGE. Key points: 1. The contract for coinage strip and metal demonstrates a significant portion of the Mint's raw material expenditure. 2. Competition dynamics appear robust, with a full and open solicitation process. 3. The fixed-price nature of the contract mitigates cost overrun risks for the government. 4. Performance is tied to specific delivery orders, allowing for focused oversight. 5. This contract positions the Mint within the broader metals and manufacturing sector. 6. The awarded amount represents a substantial investment in essential production inputs.

Value Assessment

Rating: fair

The awarded price of $24,350,758.51 for coinage strip and metal is approximately 7.3% higher than the benchmarked value of $7,379,020. This premium suggests potential overpayment or a need for deeper analysis into the specific material requirements and market fluctuations at the time of award. While the quantity and quality of the metal are critical for coinage, the significant difference warrants scrutiny to ensure optimal value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders suggests a competitive market for this specialized metal. However, the fact that the award went to one vendor at a price exceeding the benchmark raises questions about the effectiveness of the competition in driving down costs to the lowest possible level.

Taxpayer Impact: Taxpayers may have paid a premium due to the specific requirements or market conditions, as the winning bid was notably higher than the benchmarked value.

Public Impact

The primary beneficiaries are the United States Mint, ensuring a supply of essential materials for coin production. The services delivered include the provision of high-quality strip and metal crucial for minting circulating coinage. The geographic impact is primarily national, supporting the production of currency for the entire United States. Workforce implications are indirect, supporting jobs in the metals manufacturing and minting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential overpayment indicated by the 7.3% premium over the benchmarked value.
Limited transparency on the specific factors driving the price premium.
Short performance period (33 days) may have limited competitive bidding opportunities or led to expedited pricing.

Positive Signals

Awarded under full and open competition, suggesting a fair bidding process.
Fixed-price contract type helps control government spending.
Clear delivery order structure allows for focused performance monitoring.

Sector Analysis

The contract falls within the broader metals and mining sector, specifically focusing on specialized rolled products. The United States Mint is a significant consumer of such materials for coinage. Comparable spending benchmarks in this sector are difficult to ascertain without detailed knowledge of specific alloy compositions, purity standards, and market conditions for raw materials like copper.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary focus was on securing the necessary materials from large-scale manufacturers capable of meeting the Mint's specifications.

Oversight & Accountability

Oversight is likely managed through the United States Mint's contracting and procurement divisions. Accountability measures would be tied to the delivery orders, ensuring the correct quantity and quality of metal are provided within the specified timeframe. Transparency is facilitated by the public nature of federal contract awards, though detailed cost breakdowns are not typically disclosed.

Related Government Programs

Department of the Treasury Procurement
United States Mint Operations
Metals and Materials Procurement
Circulating Coinage Production

Risk Flags

Potential overpayment compared to benchmark
Limited competition with only two bidders

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $24.4 million to WIELAND ROLLED PRODUCTS NORTH AMERICA, LLC. PROVIDE STRIP AND METAL FOR CIRCULATING COINAGE.

Who is the contractor on this award?

The obligated recipient is WIELAND ROLLED PRODUCTS NORTH AMERICA, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.4 million.

What is the period of performance?

Start: 2021-05-03. End: 2021-06-05.

What specific factors contributed to the 7.3% premium over the benchmarked value for the coinage metal?

The 7.3% premium over the benchmarked value of $7,379,020 for the coinage metal, resulting in an award of $24,350,758.51, could be attributed to several factors. These may include the specific alloy composition and purity requirements mandated by the U.S. Mint, which could command a higher price than standard industrial metals. Market volatility for raw materials like copper at the time of the solicitation and award could also play a significant role. Furthermore, the expedited delivery timeline (33 days) might have necessitated premium pricing from the supplier. Without more detailed information on the benchmark's methodology and the specific contract specifications, it is challenging to pinpoint the exact drivers of this premium.

How does the competition level of 'full and open' with two bidders typically influence pricing for specialized metals?

A 'full and open' competition theoretically allows any responsible source to submit an offer, fostering a competitive environment that should drive prices down. However, the market for highly specialized materials, such as those required for coinage, may naturally have a limited number of qualified suppliers. In this case, with only two bidders, the competition might not have been robust enough to achieve the lowest possible price, especially if one bidder had a significant advantage in terms of production capacity, material sourcing, or existing relationship with the Mint. The resulting award price, exceeding the benchmark, suggests that even with competition, the specialized nature of the product and the limited number of bidders may have constrained aggressive price reductions.

What are the risks associated with a short contract duration (33 days) for metal supply?

A short contract duration of 33 days for a critical supply like coinage metal presents several risks. Firstly, it can limit the pool of potential bidders, as fewer suppliers may be able to accommodate such a rapid turnaround for production and delivery. This reduced competition can lead to higher prices. Secondly, it increases the risk of supply chain disruptions or production delays, as there is little buffer time to resolve unforeseen issues. If the supplier encounters problems, the Mint could face shortages, impacting coin production. Finally, expedited delivery often comes with a premium cost, which could contribute to the observed price difference compared to longer-term supply agreements.

What is the historical spending pattern for this type of coinage metal by the U.S. Mint?

Analyzing historical spending patterns for coinage metal by the U.S. Mint is crucial for context. While this specific award is for $24.4 million, understanding the volume and cost of similar metal procurements over previous years would reveal trends in pricing, supplier relationships, and the impact of market fluctuations. For instance, have prices consistently been at or above benchmarks, or is this an anomaly? Are there recurring suppliers, and what has been their pricing history? Without this historical data, it's difficult to definitively assess whether the current award represents a fair market price over time or a deviation requiring further investigation into market conditions or procurement strategies.

How does the 'firm fixed price' contract type mitigate risks for the U.S. Mint in this scenario?

The 'firm fixed price' (FFP) contract type is generally advantageous for the buyer, like the U.S. Mint, as it shifts the risk of cost overruns to the contractor, Wieland Rolled Products North America, LLC. Under an FFP agreement, the contractor is obligated to provide the specified goods (coinage strip and metal) for a predetermined price, regardless of their actual costs incurred during production or delivery. This protects the Mint from unexpected increases in material costs, labor, or other expenses. The primary risk for the Mint under an FFP contract is ensuring the contractor has accurately estimated their costs and has built in sufficient profit margin, which is indirectly assessed through the competitive bidding process and price analysis against benchmarks.

Industry Classification

NAICS: Manufacturing › Nonferrous Metal (except Aluminum) Production and Processing › Copper Rolling, Drawing, Extruding, and Alloying

Product/Service Code: METAL BARS, SHEETS, SHAPES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4801 OLYMPIA PARK PLZ STE 3500, LOUISVILLE, KY, 40241

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,350,759

Exercised Options: $24,350,759

Current Obligation: $24,350,759

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 2031JG18D00001

IDV Type: IDC

Timeline