Detailed Information on the
U.S. Mint: Numismatic Program Assessment

Streamline the production of numismatic products to reduce costs and improve efficiency.

Ensure a smooth transition for the Mint??s call center as it moves to an outside contractor so that customer service is not significantly interrupted.

Continue substantial progress toward reaching the Mint??s target goal for inventory turnover. In 2005, the Mint will focus on reducing the time from when a product concept is developed to when the product goes into production, and on improving production planning.

Measure: Efficiency measure: Inventory Turnover - The number of times per year the average inventory is sold. The Mint seeks to minimize its inventory of raw materials and finished goods to reduce the associated costs This measure indicates whether the Mint is efficiently handling its resources.

Explanation:Inventory Turnover is a metric that is of interest to manufacturing organizations. It is a financial metric that compares the cost of goods sold to the average inventory levels. It is interpreted as the number of times per year that the entity sells its average inventory level. Generally, entities like to sell inventory as quickly as possible, since inventory generates no profit until it is sold. Inventory also has costs associated with it, so in order to minimize those costs, many organizations want to maintain the smallest inventory possible without risk to operations. Examples of inventory costs are costs of carrying, storage, and insurance. There are also risks including obsolescence and spoilage. Therefore, other things being equal, a higher inventory turnover rate means more profitability. Inventory Turnover varies from industry to industry, and use of this metric depends on the organization's philosophy and its operating environment. A lower inventory turnover does not mean that the Mint is pushing away from the designated mission. A lower inventory could represent a changing environment (meaning that "other things are not being equal"). In the Mint's case, numismatic operations tend to have a lower inventory turnover than circulating operations. This is expected, as production takes longer, and involves more steps.

Measure: Long-term Measure: Customer Satistaction Survey - A measure of the satisfaction of customers with numismatic products. Combines elements of product quality, responsiveness, and order fulfillment.

Explanation:The formula for the CI = 0.33 (1- number of returns/number of orders) + 0.33 (% of calls answered within 1 minute) + 0.33 (1 - % of orders fulfilled byond 7 days)

Is the program purpose clear?

Explanation: The program purpose is clearly stated in federal legislation which is supported by the Mint's mission and budget statements. The purpose is to design, sell and deliver quality Numismatic collectible products.

Evidence: US Code Title 31, section 5111, Minting and issuing coins and numismatic items; PL 104-52, Public Enterprise Fund; Strategic Plan, page 3

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

Explanation: All numismatic products (I.e. bullion, proof sets, commemorative coins) are produced and marketed to satisfy the interests and demands of the coin collecting community. Additionally, if set forth in legislation, the price of commemorative coins includes a surcharge, which is paid to coin recipient organizations to meet their financial needs when these organizations satisfy certain program requirements.

Evidence: 2003 Mint Annual Report, pages 12 and 27; commemorative coin legislation (e.g. First Flight, Edison) which states how surcharge funds received must be used

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The Mint is the only entity that produces legal tender collectible coinage. We often partner with private sector vendors to repackage our coins for display and sale in the secondary market. There are private firms that use the word 'Mint' in their name and they issue tokens (coin-like products) but these products are not US legal tender coinage.

Evidence: Per the Mint's Legal Counsel, Dan Shaver, only entity is inferred from 31 U.S.C. section 321 (a) (4), and section 5103, and 5111 (a) (1). Web listing of private mints and example of products sold.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The Mint makes its coins at state-of-the-art facilities with the use of robotics. Customers are able to view and order products online, or if they choose, can order their products by telephone or mail. After an order is placed, coins are usually shipped within 3 days. This level of order fulfillment and real time product order/delivery is consistent with quality production and sales objectives in the private sector.

Evidence: 2003 Mint Annual Report. Support for ship within 3 days

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The American Customer Satisfaction Index (ACSI) score of 87 for the U.S. Mint was the highest of any government agency, and second highest of all entities (public and private) evaluated. The high score reflects world class customer service, rapid order delivery, and high product quality (e.g. few returns/dissatisfied customers). The beneficiaries of the U.S. Mint's high customer service are Numismatic customers.

Evidence: ACSI Results for Government from ACSI website; Mint Director email on 2003 ACSI; Anne Hull, Washington Post Dec. 15, 2003

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

Explanation: The Mint has a limited number of specific long-term measures. Customer Satisfaction Index (CSI) and inventory turnover are two key measures for this budget activity. The Strategic Plan Goal of the program is to design, sell, and deliver quality collectible products while holding down costs and streamlining operations. CSI, an outcome measure, tells us how well our customers view the quality of our products, the service they receive, and delivery responsiveness. Inventory turnover, an efficiency measure, is the number of times per year the inventory is sold; a higher inventory turnover indicates a more rapid cycle time, leaner manufacturing environment, and lower operating costs.

Evidence: Mint Strategic Plan, pages 3, 5, and 6.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The Mint has a target of 90 percent by 2007 on the CSI index; this target was raised from 70% given our strong performance in the baseline year for the measure. The CSI baseline year was 2003 and we scored 87%, exceeding our first year performance goal of 70%. Inventory turnover target performance is 5.1 turns per year in FY 2006 .

Evidence: Mint Strategic Plan; FY 05 President's Budget

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

Explanation: U.S. Mint Strategic Plan Goal 3-- Design Sell and Deliver Quality Products, is supported by 3 objectives that focus on increasing revenues and profits, providing excellent customer service, and redesigning coinage and medals. Each of these objectives is supported by tactical business plans specific to numismatics, which outline targets/milestones. SES performance appraisals delineate these targets as criteria for successful performance, and internal metrics with associated targets track our performance month-to-month (e.g. daily sales report, orders vs. plan, net shipped product by channel, etc).

Evidence: U.S. Mint Strategic Plan, Mint Planning Session, Sales and Marketing, December 2003, pages 1 to 6; SES appraisal forms; daily sales report, results of internal metrics and targets.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Mint has ambitious targets for both its long-term and annual measures. Inventory Turnover baseline established in FY02 (1.96 turns Mint-wide) and CSI baseline established in FY03 (87%). The Mint also has baselines and targets for internal metrics referenced in Q3, and those can be reviewed in the attached evidence (e.g. Order Quality target = 90%; Customer Care Center (CCC) Performance Target = 90%, etc)

Evidence: 2005 Department and OMB budget Submissions; 2002-2007 Strategic Plan; Internal annual metrics from Q3 above.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The Mint partners with the U.S. Postal Service to produce a collectible product called a "First Day Cover" that consists of two state quarters from the first day of mintage and a postage stamp postmarked on the issue date. The Postal Service works with the Mint to ensure that the finished product (coin and stamp) is available the "First Day" the state coin is issued to support our sales goals. The Mint and U.S. Postal Services also partnered to create a product that combines a State Quarter from the 50 State Quarter Program with its counterpart state stamp from the Greetings From America stamp series.

Evidence: www.usmint.gov listing of first-day covers and product examples.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The American Customer Satisfaction Index (ACSI) score of 87% for the U.S. Mint in FY 2003 was the highest of any government agency, and second highest of all public and private entities evaluated. The ACSI is a composite independent evaluation of the entire Numismatic program completed by the University of Michigan.

Evidence: ACSI Results for Government from ACSI website; Mint Director email on 2003 ACSI; Anne Hull, Washington Post Dec. 15, 2003

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The Performance Goal as articulated in the FY05 President's Budget submission reads, "Meet or exceed the needs of the Federal Reserve and the public by designing, selling and delivering quality circulating and numismatic coins." The performance goal is quantified by revenue targets for the Numismatic program (Revenue Targets: FY04 = $493M; FY05 = $500M). The performance measures and associated targets that define overall program success are Numismatic Inventory Turnover (efficiency; Targets: FY03 = 3.3, FY04 = 3.3) and Customer Service Index (outcome; Targets: FY03 = 70%, FY04 = 87%). The relationship of goals, targets, and measures is illustrated in the supporting 'measures' table. The full cost of the entire numismatic program is transparently described in the President's Budget in data tables and supporting narrative.

Evidence: OMB FY 2005 Performance budget Submission; Mint intranet PMA web site; Green Status -- President's Management Agenda Budget and Performance Integration

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

Explanation: The Mint Executive Team (comprised of the Mint Director, all SES staff, and key GS15 managers) meets Monday through Thursday of every week for 1 hour each day. These meetings are used to review financial data, GPRA performance metrics, President's Management Agenda progress, resolve EEO and other HR issues, discuss product design, adjust production schedules, and generally resolve other operating issues in a real-time, rapid response manner. The Executive Team reviews all key Numismatic issues each month. Some outcomes of these sessions have included major funding changes and developing or eliminating performance measures.

Evidence: Office of Brand Management, FY 03 Accomplishments; SAM BluePrint For Achievement. 10 Key Performance Measures

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 has 10 GPRA performance measures which are updated by the tenth working day of each month, and these measures tie back to the performance of the Numismatic program. Numismatic programs utilize other metrics, such as daily sales tracking and weekly back order reports. These reports are used to monitor the flow of products from manufacturing to our customers.

Evidence: Charts showing numismatic orders and performance metrics; Measures in annual report, strategic plan and on the Mint's intranet big picture web site; Congressional Budget Submission

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: As of FY 03, all Mint service contracts must be performance-based unless the Mint Director waives this requirement. This means that partners are held accountable for their cost, schedule, and performance. Mint senior managers have specific individual performance goals as part of their annual appraisal and these goals align with the Mint strategic goals.

Evidence: Mint performance based contracts; SES appraisal forms showing accountability for performance

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

Explanation: Numismatic programs spend what they need to support sales which are based on customer demand. The Mint is a Public Enterprise Fund (PEF) and its operations are funded from the sale of circulating coins to the Federal Reserve, and the sale of numismatic products and bullion coins to customers worldwide. The Mint remits funds to the Treasury General Fund in excess of what it costs to run the Mint. The Mint tracks Numismatic obligations monthly to ensure timeliness and the intended purpose of funds relative to budgeted parameters.

Evidence: OFPAR analysis of FY 03 apportionment (numismatics portion only); Financial Summary report, S. Report to Congress For The period From October 1 Through December 31, 2003 (First Quarter FY 2004)

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

Explanation: Each Numismatic program has a corresponding profit/loss statement that is evaluated to assess cost effectiveness, and can be analyzed to assess incremental changes in per unit production costs. In FY 03, Numismatics revised various vendor contracts to ensure cost efficiencies and the timely delivery of products. All new contracts have incentives and disincentives based on the timeliness of acceptable deliveries.

Evidence: Mint 2003 Annual Report; performance-based contracts; Profit and Loss Statement example (proof sets)

Does the program collaborate and coordinate effectively with related programs?

Explanation: The U.S. Mint partners with each of the 50 States' Governor's Offices to select designs for the 50 States Commemorative Quarter Program. This process was established at the start of the 50 States Quarter program and has successfully resulted in more than 25 new quarters to date in a five year period. The process begins 24 months prior to the year the effected states' quarter will be released.

Evidence: U.S. Mint State Quarter design process from www.usmint.gov

Does the program use strong financial management practices?

Explanation: The program uses strong financial management techniques as evidenced by the Mint's 10 consecutive clean audit opinions from our external auditors. This means that the Mint's auditors have determined that our financial statements are reliable and accurately reflect the Mint's financial condition. There are no material internal control weaknesses identified for the program. Further, the Mint's Office of Management Services within the CFO office conducts reviews and studies to evaluate the efficiency and effectiveness of Mint programs, major initiatives, and finance functions.

Evidence: Mint Director congratulations email to Mint staff (clean audit opinions); UKW audit letters; The Mint has established an internal function to help keep the agency on track in addressing OIG and GAO audit recommendations. A monthly status is provided to the executive team.

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

Explanation: As stated above, the Mint's Executive Team meets 4 times per week. These meetings are used to review financial data, GPRA performance metrics, President's Management Agenda progress resolve EEO and other HR issues, discuss product design, adjust production schedules, and to generally resolve other operating issues in a real-time, rapid response manner.

Evidence: OMB attended recent Executive Team session; SAM FY 04 goals; SAM Areas of Improvement; 2005 OMB budget, page Mint-22

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The Mint is performing well in its customer service measure and is making long-term steady progress in its inventory turnover measure. The Customer Service Index measuring these components scored an 87% in 2003 and exceeded its established benchmark of 70% for that time period. To promote continuous improvement, the long-term 3 year target (benchmark) was raised to 87% for FY06. In FY 04, the measure was 78%. In addition, the Mint successfully increased its inventory turnover from 1.96 in 2003 to 2.48 in 2004. The goal in 2004 was 3.3.

Evidence: US Mint Strategic Plan; FY 2003 Annual Report; FY2003-04 Congressional Budget Submissions, Customer Service Index report, Cycle Time report,

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

Explanation: The Performance Goal as articulated in the FY05 President's Budget submission reads, "Meet or exceed the needs of the Federal Reserve and the public by designing, selling and delivering quality circulating and numismatic coins." The performance goal is quantified by revenue targets for the Numismatic program, and the Mint is currently on pace to exceed its performance goals. The performance measures and associated targets that define overall program success are Inventory Turnover (efficiency; Targets: FY03 = 3.3, FY04 = 3.3) and Customer Service Index (outcome; Targets: FY03 = 70%, FY04 = 87%), as discussed above.

Evidence: FY 2003 US Mint Annual Report; FY 2005 President's Budget; (Revenue Targets: FY04 = $493M; FY05 = $500M; Actual Performance [forecast]: FY04 = $636M; FY05 = $600M).

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

Explanation: The FTEs in our dedicated Numismatic facilities (West Point, San Francisco) have declined 16% from FY02 to April 2004, and Mint-wide FTEs have declined 11% in the same timeframe, lowering operating costs. These reductions were possible as a result of improved process efficiencies related to cycle time. From FY02 - FY04 (forecasted) Numismatic revenues (e.g. level of activity) have increased at an annualized rate of 18%, while Numismatic revenues excluding bullion have increased at an annualized rate of 12%. Key reasons for this increase in revenue are sustained strong customer service, and rigorous redesign of several core products (nickel, 50 state quarter, product innovation) driving up customer demand.

Evidence: Annual Mint Budget Submissions; Annual Mint Reports

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The American Customer Satisfaction Index (ACSI) score of 87% in FY 2003 for the U.S. Mint was the highest of any government agency, compared to an average government agency score of 70%. While the Mint is a unique agency in being the only entity, public or private, to produce legal tender coinage, we do compare favorably to similar government agencies like the U.S.P.S.

Evidence: ACSI results; see above; 2003 BEP annual report

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

Explanation: The American Customer Satisfaction Index (ACSI) score of 87% for the U.S. Mint in FY 2003 was the highest of any government agency, and second highest of all public and private entities evaluated. The ACSI is a composite independent evaluation of the entire Numismatic program completed by the University of Michigan.

Evidence: ACSI Results for Government from ACSI website; Mint Director email on 2003 ACSI; Anne Hull, Washington Post Dec. 15, 2003