Treasury's $12.4M silver purchase for minting operations awarded to Sunshine Minting Inc

Contract Overview

Contract Amount: $12,398,416 ($12.4M)

Contractor: Sunshine Minting Inc

Awarding Agency: Department of the Treasury

Start Date: 2008-03-13

End Date: 2008-03-17

Contract Duration: 4 days

Daily Burn Rate: $3.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RAW MATERIAL SILVER

Place of Performance

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

State: Idaho Government Spending

Plain-Language Summary

Department of the Treasury obligated $12.4 million to SUNSHINE MINTING INC for work described as: RAW MATERIAL SILVER Key points: 1. Value for money assessed against market prices for raw silver and fabrication services. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include reliance on a single supplier for a critical raw material. 4. Performance context is tied to the operational needs of the United States Mint. 5. Sector positioning within miscellaneous fabricated metal product manufacturing.

Value Assessment

Rating: fair

The contract value of $12.4 million for raw silver and minting services needs to be benchmarked against prevailing market prices for silver bullion and fabrication costs at the time of award (2008). Without specific details on the quantity and purity of silver, a precise value-for-money assessment is challenging. However, the raw material cost component (silver) is subject to significant market volatility. The fabrication services component should be compared to industry standards for similar minting operations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting multiple bidders were considered. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The number of bidders (3) is moderate, and further analysis would be needed to determine if this represented robust competition within the specialized market for minting supplies.

Taxpayer Impact: A full and open competition process typically benefits taxpayers by driving down costs through competitive bidding, ensuring that public funds are used efficiently.

Public Impact

Benefits the United States Mint by supplying essential raw materials for coin and medal production. Services delivered include the provision of raw silver and potentially fabrication services. Geographic impact is national, supporting the Mint's operations across its facilities. Workforce implications are indirect, supporting jobs within the precious metals supply chain and minting industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in raw silver impacting overall cost.
Dependence on a single supplier for a critical component could pose supply chain risks.
Contract awarded in 2008, market conditions and pricing may have changed significantly since then.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Fixed price contract type provides cost certainty for the government.
Contract duration of 4 years allows for consistent supply.

Sector Analysis

This contract falls within the 'Miscellaneous Fabricated Metal Product Manufacturing' sector, specifically related to the production of coinage and medals. The market for precious metals, particularly silver, is global and subject to commodity price fluctuations. The United States Mint is a significant consumer of precious metals, and contracts like this are crucial for its operational continuity. Comparable spending benchmarks would involve analyzing other government or private sector contracts for large-scale precious metal procurement and fabrication.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the direct impact on small businesses through set-asides is minimal. However, the prime contractor, Sunshine Minting Inc., may engage small businesses as subcontractors, which would need further investigation. The overall impact on the small business ecosystem would depend on the subcontracting opportunities created.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officers and program managers within the United States Mint. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Precious Metals Procurement
Coinage and Medal Manufacturing
Government Supply Contracts
Department of the Treasury Operations

Risk Flags

Price Volatility of Raw Material (Silver)
Supplier Dependence Risk
Potential for Market Price Fluctuations Affecting Contract Value

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $12.4 million to SUNSHINE MINTING INC. RAW MATERIAL 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 $12.4 million.

What is the period of performance?

Start: 2008-03-13. End: 2008-03-17.

What was the specific quantity and purity of silver procured under this contract?

The provided data does not specify the exact quantity or purity of the raw silver procured. The contract value of $12,398,416.27 represents the total award amount. To conduct a thorough value analysis, knowing the precise amount of silver (e.g., in troy ounces) and its fineness (e.g., .999 fine silver) would be essential for comparing the price paid against market rates at the time of award in March 2008. This information is crucial for determining if the government received a fair price for the raw material component of the contract.

How did the unit price of silver under this contract compare to the spot market price in early 2008?

The provided data does not allow for a direct comparison of the unit price of silver under this contract to the spot market price in early 2008. The contract value is a lump sum for both raw silver and potentially fabrication services. To perform this comparison, one would need to isolate the cost attributed solely to the silver bullion based on its quantity and purity, and then compare that to the prevailing spot prices (e.g., London Bullion Market Association or COMEX) during the contract's performance period. Without this breakdown, assessing the value-for-money specifically on the silver commodity is not possible from the given data.

What were the fabrication service rates included in the contract, and how do they benchmark?

The contract data does not explicitly detail the breakdown between the cost of raw silver and the cost of fabrication services. Therefore, an assessment of the fabrication service rates and their benchmarking against market standards is not possible with the information provided. Typically, fabrication costs would be based on factors like complexity of the design, minting process, quality control, and overhead. To benchmark these rates, one would need to obtain industry cost data for similar minting operations or compare against other government contracts for related services.

What is Sunshine Minting Inc.'s track record with government contracts, particularly with the US Mint?

Sunshine Minting Inc. has a history of supplying precious metals and minting services. While this specific contract was awarded in 2008, their broader track record with the US Mint and other government agencies would involve reviewing past and present contract awards, performance evaluations, and any documented issues or successes. A comprehensive review would assess their reliability, quality of products/services, and adherence to contract terms across multiple engagements. This information is typically available through federal procurement databases and agency performance records.

How has the US Mint's spending on raw materials like silver trended over the years?

Analyzing the US Mint's spending trends on raw materials like silver requires access to historical procurement data beyond this single contract. A trend analysis would involve examining annual reports, budget allocations, and contract databases over several fiscal years. Key factors influencing spending would include the demand for specific coins and medals, fluctuations in silver prices, and changes in minting production volumes. Comparing spending patterns before and after 2008, and looking at the volume of silver procured versus the price paid, would provide insights into historical spending behavior and efficiency.

What are the potential risks associated with relying on a single supplier for critical raw materials like silver?

Relying on a single supplier for critical raw materials like silver presents several risks. Firstly, there's a risk of supply chain disruption due to unforeseen events affecting the supplier (e.g., operational issues, natural disasters, geopolitical instability). Secondly, it can lead to reduced bargaining power for the buyer, potentially resulting in higher prices over time, especially if competition is limited in subsequent procurements. Thirdly, quality control issues from a sole supplier could have a more significant impact on production. Mitigating these risks often involves maintaining strategic stockpiles, developing alternative supplier relationships, and conducting rigorous supplier performance monitoring.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › All Other Miscellaneous Fabricated Metal Product Manufacturing

Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 750 W CANFIELD AVE, COEUR D ALENE, ID, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $12,398,416

Exercised Options: $12,398,416

Current Obligation: $12,398,416

Timeline