Treasury's $128M printing equipment contract awarded to Koenig & Bauer Banknote Solutions SA under full and open competition

Contract Overview

Contract Amount: $128,453,349 ($128.5M)

Contractor: Koenig & Bauer Banknote Solutions SA

Awarding Agency: Department of the Treasury

Start Date: 2017-09-28

End Date: 2025-12-31

Contract Duration: 3,016 days

Daily Burn Rate: $42.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DESIGN, FABRICATION, ASSEMBLY, INTEGRATION, DELIVERY, INSTALLATION, SET-UP, TESTING AND TRAINING OF THREE (3) NON-SEQUENTIAL LARGE EXAMINING AND PRINTING EQUIPMENT (NS-LEPE) MACHINES WITH OPTION FOR THREE ADDITIONAL NS-LEPE.

Plain-Language Summary

Department of the Treasury obligated $128.5 million to KOENIG & BAUER BANKNOTE SOLUTIONS SA for work described as: DESIGN, FABRICATION, ASSEMBLY, INTEGRATION, DELIVERY, INSTALLATION, SET-UP, TESTING AND TRAINING OF THREE (3) NON-SEQUENTIAL LARGE EXAMINING AND PRINTING EQUIPMENT (NS-LEPE) MACHINES WITH OPTION FOR THREE ADDITIONAL NS-LEPE. Key points: 1. The contract value of $128.45 million represents a significant investment in specialized printing machinery. 2. Awarded via full and open competition, suggesting a robust market for this type of equipment. 3. The firm-fixed-price contract type shifts cost risk to the contractor. 4. The duration of the contract (over 8 years) indicates a long-term need for these capabilities. 5. The Bureau of Engraving and Printing is the primary user, highlighting the critical nature of the equipment for currency production. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging due to the specialized nature of 'Large Examining and Printing Equipment'. However, the firm-fixed-price structure is generally favorable for the government, locking in costs. The duration of over eight years suggests a potentially good value if the equipment meets long-term operational needs and avoids costly replacements or upgrades. Further analysis would require comparing the per-unit cost to similar, albeit likely less complex, printing machinery acquisitions.

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. This competitive process is expected to drive more favorable pricing and ensure the government receives the best value. The number of bidders and the specific evaluation criteria would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and higher quality goods and services.

Public Impact

The primary beneficiary is the Bureau of Engraving and Printing (BEP), which will utilize the equipment for its core mission of producing U.S. currency and other government securities. The services delivered include the design, fabrication, assembly, integration, delivery, installation, set-up, testing, and training for three specialized printing machines. The geographic impact is concentrated at the BEP's facilities, likely in Washington D.C. or Fort Worth, Texas. Workforce implications include the need for trained operators and maintenance personnel at the BEP to utilize the new equipment effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specialized maintenance or parts are required exclusively from Koenig & Bauer.
The long contract duration could expose the government to risks if technology rapidly advances beyond the capabilities of this equipment.
Dependence on a single contractor for critical currency production machinery could pose a supply chain risk.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and potentially good value.
Firm-fixed-price contract type transfers cost overrun risk to the contractor.
The contract includes training, which is a positive signal for successful implementation and operational readiness.
The contractor, Koenig & Bauer Banknote Solutions SA, is a known entity in the banknote printing industry, suggesting relevant expertise.

Sector Analysis

The contract falls within the 'Printing Machinery and Equipment Manufacturing' sector. This is a specialized niche within manufacturing, often characterized by high barriers to entry due to technological complexity and capital investment. The market size for such highly specialized currency printing equipment is limited to government entities and a few large financial institutions. Koenig & Bauer is a significant player in this global market.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'sb' field is false and 'ss' (small business set-aside) is also false. This suggests that the procurement was not specifically targeted towards small businesses. Further review of subcontracting plans would be necessary to determine if small businesses will have opportunities to participate in fulfilling parts of this contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Bureau of Engraving and Printing's contracting officers and program managers. The Department of the Treasury's Inspector General may also have jurisdiction for audits and investigations related to the contract's performance and financial integrity. Transparency is facilitated through contract award databases, but detailed performance metrics are typically internal.

Related Government Programs

Currency Production Equipment
Government Security Printing
Manufacturing Equipment Procurement
Bureau of Engraving and Printing Operations

Risk Flags

Long contract duration may lead to technological obsolescence.
Potential for sole-source reliance on contractor for maintenance and parts.
Dependence on a single contractor for critical national infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $128.5 million to KOENIG & BAUER BANKNOTE SOLUTIONS SA. DESIGN, FABRICATION, ASSEMBLY, INTEGRATION, DELIVERY, INSTALLATION, SET-UP, TESTING AND TRAINING OF THREE (3) NON-SEQUENTIAL LARGE EXAMINING AND PRINTING EQUIPMENT (NS-LEPE) MACHINES WITH OPTION FOR THREE ADDITIONAL NS-LEPE.

Who is the contractor on this award?

The obligated recipient is KOENIG & BAUER BANKNOTE SOLUTIONS SA.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Bureau of Engraving and Printing).

What is the total obligated amount?

The obligated amount is $128.5 million.

What is the period of performance?

Start: 2017-09-28. End: 2025-12-31.

What is the historical spending pattern for similar printing equipment at the Bureau of Engraving and Printing?

Analyzing historical spending for similar equipment at the Bureau of Engraving and Printing (BEP) is crucial for context. While specific data on past acquisitions of 'Large Examining and Printing Equipment' is not readily available in the provided snippet, the BEP has a long history of procuring advanced printing technology. Past procurements would likely involve significant capital outlays, similar to this $128 million contract. Trends might include upgrades to enhance security features, increase production speed, or improve efficiency. Understanding the frequency and cost of previous equipment lifecycles would help determine if this current contract represents a typical replacement cycle or an expansion of capabilities. Without access to the BEP's historical procurement databases, a precise comparison is difficult, but it's reasonable to assume substantial investments are standard for maintaining national currency production.

How does the per-unit cost of this equipment compare to industry benchmarks for high-security printing machinery?

Determining the precise per-unit cost and comparing it to industry benchmarks for high-security printing machinery is challenging without more detailed specifications of the 'Large Examining and Printing Equipment' (NS-LEPE) and access to proprietary pricing data. The contract covers three machines with an option for three more, totaling approximately $21.4 million per machine ($128.45M / 6 machines). This figure must account for the extensive scope including design, fabrication, assembly, integration, delivery, installation, set-up, testing, and training. Koenig & Bauer is a specialized manufacturer, and high-security printing equipment, especially for currency, commands a premium due to intricate technology, precision engineering, and stringent security features. Comparable equipment in commercial printing might be less expensive, but lacks the specific security and regulatory compliance required for currency. Therefore, while the per-unit cost appears substantial, it may be within the expected range for this highly specialized, government-grade machinery.

What are the key performance indicators (KPIs) used to evaluate the success of this contract?

Key Performance Indicators (KPIs) for this contract would likely focus on the operational performance and reliability of the three (or up to six) Non-Sequential Large Examining and Printing Equipment (NS-LEPE) machines. Essential KPIs would include uptime and availability rates, ensuring the machines are operational when needed for currency production. Production output metrics, such as the number of sheets or notes processed per hour/day, would measure efficiency. Quality control metrics, like defect rates (e.g., misprints, examination errors), are critical for maintaining currency integrity. Furthermore, adherence to delivery schedules for installation and successful completion of training programs would be monitored. The contract's firm-fixed-price nature also implies that cost control and avoiding cost overruns are implicit KPIs. Finally, meeting all security and compliance standards related to currency production would be paramount.

What is the track record of Koenig & Bauer Banknote Solutions SA with government contracts, particularly for similar equipment?

Koenig & Bauer Banknote Solutions SA has a significant track record in the specialized field of banknote printing equipment. As a major global player, they have supplied currency printing machinery to central banks and government printing works worldwide. While specific details of their past U.S. government contracts are not provided here, their long-standing presence and reputation in the industry suggest experience in meeting the rigorous demands of government clients. This includes adhering to strict security protocols, quality standards, and performance requirements. Their ability to secure a contract of this magnitude from the Bureau of Engraving and Printing, especially under full and open competition, implies a history of successful performance and competitive offerings in previous engagements, likely including other government entities or similar high-stakes clients.

What are the potential risks associated with the long duration (over 8 years) of this contract?

The extended duration of this contract, spanning from September 2017 to December 2025 (over 8 years), presents several potential risks. Technological obsolescence is a primary concern; advancements in printing and examination technology could render the acquired equipment outdated before the contract's end, potentially impacting efficiency or security features. Maintenance and spare parts could also become an issue; if the manufacturer ceases production of certain components or if specialized knowledge becomes scarce, upkeep could be challenging and costly. Furthermore, the long-term commitment ties up significant government funds, potentially limiting flexibility to adapt to changing production needs or budget constraints. Contractor viability is another factor; while Koenig & Bauer is established, unforeseen business challenges could arise over such an extended period. Finally, the government might miss opportunities to leverage newer, more cost-effective technologies that emerge during the contract term.

Industry Classification

NAICS: Manufacturing › Industrial Machinery Manufacturing › Printing Machinery and Equipment Manufacturing

Product/Service Code: SPECIAL INDUSTRY MACHINERY

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 2031ZA17R00001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Koenig & Bauer AG

Address: AVENUE DU GREY 55, LAUSANNE

Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $147,696,549

Exercised Options: $128,453,349

Current Obligation: $128,453,349

Actual Outlays: $83,037,997

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline