Treasury's $77M Intaglio Printing Press Contract with Koenig & Bauer Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $77,001,895 ($77.0M)

Contractor: Koenig & Bauer Banknote Solutions SA

Awarding Agency: Department of the Treasury

Start Date: 2016-12-15

End Date: 2025-05-01

Contract Duration: 3,059 days

Daily Burn Rate: $25.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: INTAGLIO PRINTING PRESSES

Plain-Language Summary

Department of the Treasury obligated $77.0 million to KOENIG & BAUER BANKNOTE SOLUTIONS SA for work described as: INTAGLIO PRINTING PRESSES Key points: 1. The contract for intaglio printing presses represents a significant investment in specialized equipment. 2. Koenig & Bauer Banknote Solutions SA is a key player in this niche market, raising questions about true competition. 3. The long duration and firm fixed-price nature of the contract warrant a close look at potential cost overruns and value. 4. The sector is highly specialized, with limited domestic manufacturers, impacting procurement options.

Value Assessment

Rating: questionable

The contract value of $77 million for intaglio printing presses appears high, especially given the duration. Benchmarking against similar specialized printing equipment procurements is crucial to determine if this price reflects fair market value or includes significant premiums.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While advertised as full and open competition, the specialized nature of intaglio printing presses may limit the number of capable bidders. This could lead to a less competitive environment than intended, potentially impacting price discovery and overall value for the government.

Taxpayer Impact: The substantial contract value raises concerns about taxpayer dollars. Ensuring competitive pricing and efficient execution is vital to maximize the value derived from this significant expenditure.

Public Impact

Impacts the Bureau of Engraving and Printing's ability to produce currency and other security documents. Potential for long-term reliance on a single supplier for critical equipment maintenance and upgrades. Ensures the continued operation of essential government functions related to currency production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition due to specialized nature of equipment
Potential for price creep over the contract duration
Lack of small business participation noted

Positive Signals

Contract awarded through full and open competition
Firm fixed-price contract provides cost certainty

Sector Analysis

The procurement falls within the 'Printing Machinery and Equipment Manufacturing' sector. Spending in this niche area is typically characterized by high unit costs due to specialized engineering and manufacturing processes. Benchmarks are difficult to establish due to the limited number of global suppliers.

Small Business Impact

The data indicates no small business participation in this contract. Given the highly specialized and capital-intensive nature of intaglio printing presses, it is common for large, established manufacturers to dominate this market, often excluding smaller businesses.

Oversight & Accountability

The Bureau of Engraving and Printing, under the Department of the Treasury, is responsible for this procurement. Oversight should focus on ensuring the equipment meets stringent security and operational requirements and that the pricing remains competitive throughout the contract's lifecycle.

Related Government Programs

Printing Machinery and Equipment Manufacturing
Department of the Treasury Contracting
Bureau of Engraving and Printing Programs

Risk Flags

Potential for limited competition
High contract value
Long contract duration
Lack of small business involvement
Risk of vendor lock-in for specialized parts/service

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $77.0 million to KOENIG & BAUER BANKNOTE SOLUTIONS SA. INTAGLIO PRINTING PRESSES

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 $77.0 million.

What is the period of performance?

Start: 2016-12-15. End: 2025-05-01.

What is the total cost of ownership for these intaglio printing presses over their expected lifespan, including maintenance, consumables, and potential upgrades?

Determining the total cost of ownership is critical for a comprehensive value assessment. This would involve analyzing not only the initial acquisition cost of $77 million but also projecting future expenses related to specialized maintenance, proprietary consumables, and necessary technological upgrades. Without this forward-looking analysis, the government may underestimate the long-term financial commitment.

How does the government ensure ongoing competitive pricing for spare parts and maintenance services, given the potential for sole-source situations with specialized equipment?

Ensuring competitive pricing for specialized equipment maintenance and parts requires proactive contract management. Strategies include negotiating comprehensive service agreements upfront, periodically benchmarking pricing against industry standards, and exploring options for third-party maintenance providers if feasible. The government should also maintain detailed records of all maintenance and parts procurements to identify any price anomalies.

What performance metrics are being used to evaluate the effectiveness and efficiency of these intaglio printing presses post-delivery?

Effectiveness is typically measured through key performance indicators (KPIs) such as print quality (resolution, accuracy), production output (sheets per hour), uptime/availability rates, and defect rates. Regular performance reviews against these established benchmarks are essential to ensure the presses meet operational needs and justify the significant investment. Any deviations should trigger corrective actions.

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: BEP-RFP-16-0424

Offers Received: 2

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: $77,001,895

Exercised Options: $77,001,895

Current Obligation: $77,001,895

Actual Outlays: $24,125,223

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline