Detailed Information on the
U.S. Mint: Coin Production Assessment

Reducing the maintenance down time of coin manufacturing machinery.

Establishing a performance target to reduce the time required to process raw materials into finished goods.

Competing customer service and order mailing staff to determine if contractors could handle these functions more efficiently.

Measure: Reduction in the controllable costs of circulating coinage from a 1997 baseline of $10.27 per 1000 coins Controllable costs exclude the costs of metals which vary considerably with market conditions. (Targets being refined)

Explanation:

Measure: Federal Reserve Board Customer Satisfaction survey (Average rating out of one hundred, based on surveys of Federal Reserve officials)

Explanation:This measure has been discontinued.

Measure: Conversion costs per 1,000 coin equivalents ($)

Explanation:The United States Mint's costs vary by product, and the product mix has been variable over time. This makes it difficult to compare operating results from year to year. The coin equivalent calculation converts the production output to a common denominator based on the circulating quarter.

Measure: Conversion costs per 1,000 coin equivalents (% deviation from target)

Explanation:The United States Mint's costs vary by product, and the product mix has been variable over time. This makes it difficult to compare operating results from year to year. The coin equivalent calculation converts the production output to a common denominator based on the circulating quarter. This measure reflects the Mint's ability to meet its goals set for efficiency.

Is the program purpose clear?

Explanation: The Circulating Coin program is clearly stated in the Mint's FY 00 Strategic Plan: Produce coinage to satisfy the needs of commerce in a cost efficient and safe manner with state-of-the-art manufacturing technology and equipment. The Mint also produces numismatic and bullion coins and is responsible for protection of its precious metals inventory.

Evidence: The United States Mint was established on April 2, 1873 by an act of Congress and became an operating bureau of the Treasury pursuant to the Coinage Act of 1873. Specific authorities of the Secretary of Treasury in coinage are codified in Title 31, secs. 5111-5112. FY 1996 Treasury/GG Appropriations Act(PL 104-52)created the Public Enterprise (revolving) Fund to finance the operations of the Mint and eliminated the need for discretionary appropriations.

Does the program address a specific interest, problem or need?

Explanation: The government has a vested interest in ensuring the availability of circulating coinage in commerce.

Evidence:  

Is the program designed to have a significant impact in addressing the interest, problem or need?

Explanation: The Mint's circulating coin program is designed specifically to respond to the Fed Reserve's (FRB) demand for coinage.

Evidence: In FY 2001, $564 million or 59% of the Mint's overall expenses involved circulating coinage, 37% involved numismatic products, and 4% involved protection of assets.

Is the program designed to make a unique contribution in addressing the interest, problem or need (i.e., not needlessly redundant of any other Federal, state, local or private efforts)?

Explanation: There is no other Federal, State, or local governmental entity that produces circulating coins.

Evidence: Coinage Act of 1873

Is the program optimally designed to address the interest, problem or need?

Explanation: There are a variety of models and organizational structures for circulating coin production in the world; however, there is no conclusive evidence that any one of them is most efficient.

Evidence:  

Does the program have a limited number of specific, ambitious long-term performance goals that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The Mint's current strategic plan includes several long term goals for the circulating program; however, only one is considered ambitious and meaningfully reflects the purpose of the program. The Mint recently revised its strategic plan and is currently working with Treasury and OMB to ensure that it reflects its vision of providing value, integrity, and performance consistent with GPRA and PMA. In the current plan, there are five strategic goals, one of which is ambitious and an other which is an efficiency goal.

Evidence: Circulating coinage five objectives: 1)Produce coins and maintain inventories at sufficient levels to meet Federal Reserve Bank requirements (not ambitious, specific); 2)Produce circulating commemorative quarters as mandated by law (not ambitious, specific); 3)By 2005, reduce the controllable costs of circulating coinage by 15 percent from FY 1997(ambitious, specific); 4)Become a world leader in minting technology (ambitious, not specific); 5) Produce and promote a dollar coin as mandated by law (not ambitious, specific).

Does the program have a limited number of annual performance goals that demonstrate progress toward achieving the long-term goals?

Explanation: The Mint's current annual performance goal for the program : 1)Conversion cost per 1,000 coin equivalents. (Note: the coin equivalent methodology assigns a weighting for each denomination based on the resources it takes to make the coin from blank or coin strip.) The Mint recently revised its strategic plan and has established several annual performance goals to demonstrate progress towards achieving the new long-term goal of the program.

Evidence: Treasury's current strategic goal: Improve the efficiency of production operations and maintain the integrity of US coins and currency. Mint's long term strategic goals for circulating coinage: reduce controllable costs (excluding metals) by 15% by 2005. New annual performance measures include 1) Yield, 2) machine availability, 3) cycle time, 4)inventory turnover,5) lost time accident rate. The Mint will also use workload measures to indicate progress towards achieving goals. However, the Mint has not made significant linkages between their annual performance goals to the four other strategic goals reference above.

Do all partners (grantees, sub-grantees, contractors, etc.) support program planning efforts by committing to the annual and/or long-term goals of the program?

Explanation: The Federal Reserve is a partner with the Mint in the coining process. One joint activity that is performed within the partnership is monitoring coin activity within the federal Reserve Bank (FRB), the economy and within the Mint's and FRB's join coin inventories. A joint Mint/Federal Reserve Coin Efficiencies Workgroup was formed in October 2001 to streamline the coin manufacture and distribution system.

Evidence: 1. Coin Efficiencies Workgroup. 2. TR9000 Report: a report customized for the Mint by the Federal Reserve, which lists coin demand, shipments, payouts, receipts, and Mint inventories. This report is used by the Mint to forecast coin needs of the public. Moreover, the report is used monthly, quarterly, and annually to study coin activity externally in commerce and internally, within the Mint.

Does the program collaborate and coordinate effectively with related programs that share similar goals and objectives?

Explanation: The U.S. Mint is part of a supply chain to provide coinage to commerce. The Federal Reserve is a partner in that supply chain and serves as the distribution point for coinage to the commercial banking system. The Mint works closely with the FRB to establish coin orders and shipment schedules to more than 100 endpoints (armored carrier terminals and depository institutions to which the Mint delivers coinage).

Evidence: 1. Coin Efficiency Workgroup 2. Federal Reserve Bank Liaison staff. The workgroup consists of members from the FRB and the Mint FRB liaison staff. The role of the joint workgroup is to streamline the coin manufacture and distribution system, and lower costs to the American economy. Joint efforts of the group include initiatives such as: 1) develop joint Mint/FRB macro-economic model to forecast long-term coin demand; 2) reduce storage and handling at the Mint warehouses; 3) reduce transportation costs; and 4)implement monthly ordering and inventory tool.

Are independent and quality evaluations of sufficient scope conducted on a regular basis or as needed to fill gaps in performance information to support program improvements and evaluate effectiveness?

Explanation: The OIG and the GAO do not regularly evaluate Mint programs. However, the Mint's Office of Chief Financial Officer (OCFO) conducts a review of the Mint's performance on a monthly basis. Further independent auditors (Urbach, Kahn & Werlin LLP Certified Public Accountants) review the Mint during its annual audit process.

Evidence:  

Is the program budget aligned with the program goals in such a way that the impact of funding, policy, and legislative changes on performance is readily known?

Explanation: The budget for the program is generally aligned with the program goals and is linked to the Mint's strategic plan.

Evidence: The Mint uses activity-based costing principles to assess full cost of each of its main programs. The Mint's congressional justification and budget documentation are integrated in such a way to reflect the three budget activities: 1) circulating coinage; 2) numismatic and bullion coinage; 3) protection of assets, and are aligned with the performance measures directly related to them. Since coin demand fluctuates due to changes in the economy, the Mint and FRB have jointly implemented a coin inventory management and forecasting tool.

Has the program taken meaningful steps to address its strategic planning deficiencies?

Explanation: The Mint has a process for identifying and responding to deficiencies in their strategic planning and is currently working with Treasury and OMB to ensure that it is meaningful, sufficiently ambitious, and consistent with the GPRA.

Evidence: Actual performance results are reviewed against planned performance regularly. In addition, a performance measure task force was established to review and analyze the Mint's current and past performance measures and to identify opportunities for improvement.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Mint's coinage operations depends heavily on their partnership with the Federal Reserve. The Mint uses a report (TR9000), customized for the Mint by the Federal Reserve, which lists coin demand, shipments, payouts, receipts, and Mint inventories. This report is used by the Mint to forecast coin needs of the public. The Mint also uses the COINS system to generate cost data reports.

Evidence: 1. Internal Measures Sheet, 2. Vendor Contracts, 3. TR9000 Report.

Are Federal managers and program partners (grantees, subgrantees, contractors, etc.) held accountable for cost, schedule and performance results?

Explanation: The Mint does not specifically use performance measures to evaluate the performance of its SES or mid-level managers. However, the OCFO conducts monthly financial reviews with the Mint's Executive Team to review and discuss financial information, performance measures, and various projects or initiatives. The managers are expected to provide updates, and explain and justify variances in the financial and performance information.

Evidence:  

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: The Mint is a Public Enterprise Fund and its circulating coin program operations are funded from the "sale" of circulating coins (at face value) to Federal Reserve Banks. While receipts do not expire, the Mint does obligate in a timely manner.

Evidence: Financial Summary report, SF 132 Apportionment.

Does the program have incentives and procedures (e.g., competitive sourcing/cost comparisons, IT improvements) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Mint has developed procedures to allow managers to find efficiencies and improve cost effectiveness in program execution. Frontline managers can assess the status of key performance measures through the Mint intranet.

Evidence: Examples: 1)Coinage Strip Contracts award. The Mint examined its process for procuring raw metals and contracting the coinage strip fabricators and discovered opportunities for savings. The Mint worked with two current suppliers to develop process improvements, negotiate reduced fabrication rates, and give the contracting fabricators the responsibility for procuring the raw metals. Estimated savings $38.7 million or 5% from 2002-2007. 2) Monthly performance results published on the Mint Intranet.

Does the agency estimate and budget for the full annual costs of operating the program (including all administrative costs and allocated overhead) so that program performance changes are identified with changes in funding levels?

Explanation: The Mint began implementation of activity based management in 1999 for its circulating facilities. However, the FY 04 Budget does not include the full cost of retirement.

Evidence: 1. Manufacturing's Activity Based Costing (ABC) Model, 2. Corporate Allocation Study (1997) The ABC Model information allows the Mint to measure and track process improvements both from an operation and financial standpoint. The ABC system allows for full costing of direct materials, indirect materials, direct labor, indirect labor, and fixed and variable overhead. The ABC Model also enables the Mint to do various scenarios in its budget formulation.

Does the program use strong financial management practices?

Explanation: For the past eight years, the Mint has received a clean audit opinion. There are no material internal control weaknesses identified for this activity. Further, the Mint has established an internal function to conduct reviews and studies to evaluate the efficiency and effectiveness of the Mint programs, major initiatives, and finance functions.

Evidence: OIG Audit Reports. The Mint has established an internal function to help keep the Mint on track in addressing the audit recommendations from GAO/OIG. A monthly status update is provided to the executive team.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Mint has made notable efforts to establish internal processes separate from its production functions that address management deficiencies.

Evidence: Although there are no internal control weaknesses for the program, weaknesses have been identified for its information technology environment, and in specific applications that support circulating coinage and other operations. To address management deficiencies in the areas of computer security, the Mint has undertaken an extensive, voluntary audit of its information technology security. A program to address computer security incidents has been put in place and mandatory training classes for employees were provided.

Has the program demonstrated adequate progress in achieving its long-term outcome goal(s)?

Explanation: FY 2001 showed significant progress towards achieving the long-term goal.

Evidence: GPRA Performance Report

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Mint either met or exceeded its annual performance targets

Evidence: GPRA Performance Report

Does the program demonstrate improved efficiencies and cost effectiveness in achieving program goals each year?

Explanation: In addition to achieving its annual efficiency targets (Conversion cost to produce 1000 coin equivalents), the Mint has two programs that have improved efficiency and safety-- the bulk bag program and capital improvements.

Evidence: Bulk bag program: During the last 24 months the Mint worked with the FRBs, the coin processing industry, equipment suppliers and other stakeholders to implement bulk bag packaging of coins for shipment instead of manually bagging smaller bags. The Mint expects savings of $3 million annually. Coining press replacement plan: The Mint is currently conducting a life cycle analysis on its major coining equipment. Initial goal is to begin replacement of its 20+ year old finger press.

Does the performance of this program compare favorably to other programs with similar purpose and goals?

Explanation: The Mint and BEP have a common efficiency measure-- Conversion cost to produce 1000 coins/notes . However, the products produced are so varied that the costs between producing 1000 coins versus notes is not necessarily meaningful. For FY 04, both the Mint and BEP will have new measures such as "General and Administrative costs as a percentage of revenue (for the Mint) and as a percentage of total cost (for BEP). Although the measure is not exactly the same, the tracking of such information in the future will allow more meaningful comparison of common functions.

Evidence:  

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: See Section II, Question 5. While there are no regularly scheduled, independent evaluations that indicate the program's effectiveness, the Mint conducts a Federal Reserve Board Customer Satisfaction Survey and has made noteworthy efforts to institutionalize organizational self assessments of performance, such as creating an Office of Program Evaluation within the Mint.

Evidence: Although the Mint does not have regularly scheduled independent and comprehensive evaluations, the agency has attempted to reach out to other Mints to study specific issues such as technology improvements. In FY 1999, a team with members from the Royal Canadian Mint, the British Royal Mint, and the US Mint interviewed personnel from each facility and reviewed the operations. From the review, a list of technology projects was developed to enable the Mint to improve its process. Projects include the review of die steel, upsetting of blanks before annealing, and blank thickness control.