The Conservative Beacon

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Government Printing Office Profits at the Expense of American Taxpayers and Security

Posted by Joshua Price on March 27, 2008

This story about the outsourcing of the manufacturing of U.S. passports, reported by Bill Gertz, is getting more interesting.

Gertz has written the second in a three-piece installment about the issue today, and in it he reports that the GPO recorded a $100 million profit. Now you may say, What’s the big deal? All it means is that the GPO took $100 million more in revenue than it had it costs. Fair enough.

But there’s a little problem with that: the GPO is only supposed to break-even. In other words, it’s only supposed to charge what it takes to offset its costs.

According to the GPO:

The bonuses are part of a 2005 plan by GPO, which is a monopoly printer for the U.S. government, to generate greater revenues under the assumption that a private-sector business model is more efficient, GPO documents show.

Okay, I have no problem with the business approach to operating government agencies. In fact, I am a proponent of it, but what the GPO forgot (or didn’t care about) is the quaint little we fact the we, American taxpayers, are the shareholders in this case. Therefore that $100 million should have been returned to the taxpayers, but it wasn’t.

What was done with it?

When the government’s main printing agency booked $100 million in unexpected profit it went on a spending spree: large bonuses to top managers, trips to Paris and Las Vegas, and an official photo of the boss that cost $10,000.
The bonuses, some nearly as high as $13,000, and travel are raising questions among congressional investigators and Government Printing Office officials about whether the agency is misusing its newfound wealth and whether it received the proper authority for some of the larger compensation payments from the Office of Budget and Management.
Additionally, investigators are looking into whether Public Printer Robert C. Tapella paid close to $10,000 for photographs of himself for his office and during his swearing-in ceremony in November.

And how is the GPO making such a profit? Well for starters, go to the GPO website and try to purchase a hard copy of the federal budget and you’ll soon find that it will cost roughly the amount for a rather nice dinner for two. So that’s how they’re doing on the revenue side, but let’s not forget about the cost side of the equation.

The GPO has apparently been able to cut a considerable amount of cost by outsourcing part of the production process used to make U.S. passports which presents major security issues:

Additionally, The Washington Times’ investigation disclosed that the security of the blank-passport production involves computer chips purchased in Europe and then shipped to Thailand for outfitting with a wire antenna that transmits personal data to an electronic scanner at U.S. border entry points. Security specialists said the use of foreign chips and assembly abroad makes the blank passports, a key travel document, vulnerable to theft or counterfeiting.

A Dutch company that assembles e-passport covers in Thailand, Smartrac Technology Ltd., said it could not guarantee steady production of passports and warned in its annual report that social unrest in Thailand could halt production.
Internal GPO documents obtained by The Times revealed that GPO has faced security problems related to passport production, including the use of unsecure FedEx couriers.

That’s fantastic. Of course our wonderful government officials continue to tell us that we have nothing to worry about:

GPO officials, however, insist the production process is secure.

Officials at GPO, the Homeland Security Department and the State Department said they review security of overseas suppliers and that the production process is secure.

Of course it’s secure, I mean, what could possibly be insecure about sending blank American passports overseas?

Here’s what is really interesting about this story:

Gregory Brower, the GPO general counsel until last year, also received a $7,500 bonus. Mr. Brower, now U.S. attorney in Nevada, made a key legal opinion that permitted GPO to make large profits from the sale of passports to the State Department, despite laws restricting GPO to operating at basically a break-even business model.

It will be very interesting to see what happens in Brower’s case. Was the legal opinion justified? Or was it possibly given in order to make the profits in an attempt to get a bonus?

As I said yesterday, greed is destroying American allegiance and security–even inside the government.

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