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Currency Paper Procurement: Meaningful Competition Unlikely Under Current Conditions

GGD-98-181 Published: Aug 28, 1998. Publicly Released: Aug 28, 1998.
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Highlights

Pursuant to a legislative requirement, GAO provided information on the: (1) optimum circumstances for the procurement of distinctive currency paper; (2) effectiveness of the Bureau of Engraving and Printing's (BEP) efforts to encourage competition in the procurement of currency paper; (3) fairness and reasonableness of prices paid for currency paper by BEP and the quality of the paper purchased; and (4) potential for disruption to the U.S. currency paper supply from BEP's reliance on a single source.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
To further assist the Secretary in obtaining competition from domestic sources, Congress may wish to consider lengthening the 4-year limit for currency paper contracts to give potential offerors a longer time to recover their capital investments. If adequate price competition among two or more suppliers can be achieved, concerns over whether the prices paid are fair and reasonable should be reduced.
Closed – Not Implemented
Congress did not take any action regarding this recommendation.
Congress may wish to consider revising the Conte Amendment, which allows the Secretary of the Treasury to obtain currency paper from a foreign-owned source only if no domestic supplier is available, to permit the Secretary to authorize obtaining currency paper from a foreign-owned source on a temporary basis if it is determined that no domestic supplier will provide paper at fair and reasonable prices. Such a provision should improve the likelihood that fair and reasonable prices could be obtained.
Closed – Not Implemented
Congress did not take any action regarding this recommendation.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury To strengthen BEP's capacity to ensure fair and reasonable prices, the Secretary of the Treasury should direct BEP to ensure that the contractor maintains acceptable cost accounting and estimating systems for future contracts and that they are periodically audited.
Closed – Implemented
In a letter dated August 23, 1999, BEP noted that it will perform audits for future contracts to ensure fair and reasonable prices, when applicable, under Public Law 100-679. BEP is now complying with the FAR (Federal Acquisition Regulations).
Department of the Treasury To strengthen BEP's capacity to ensure fair and reasonable prices, the Secretary of the Treasury should direct BEP to arrange for post-award audits of the contractor's costs.
Closed – Implemented
In a letter dated August 23, 1999, BEP noted that it will provide post-award audits when applicable, therefore, BEP is now complying with the FAR.
Department of the Treasury To strengthen BEP's capacity to ensure fair and reasonable prices, the Secretary of the Treasury should direct BEP to include data and analyses in the currency paper procurement record that demonstrate the benefits the government is to receive when it approves profit levels that are aimed at recognizing or providing an incentive for capital investments.
Closed – Implemented
In a letter dated August 23, 1999, BEP stated that for the current contract, the supporting documentation (the cost data, which includes proposed profit) was not required because it was competitively awarded. BEP is now complying with FAR.
Department of the Treasury To strengthen BEP's capacity to ensure fair and reasonable prices, the Secretary of the Treasury should direct BEP to, to the extent possible, make more extensive use of price analysis to determine the fairness and reasonableness of prices, including the collection of data from foreign countries on their currency prices and data on similar supplies purchased by other agencies, such as paper for passports and money orders.
Closed – Implemented
On March 14, 2002, the Bureau of Engraving and Printing (BEP) said it issued a solicitation for paper in November 2001, and required offerers to submit cost and pricing data to determine the reasonableness of prices. An award is expected in July of 2002.
Department of the Treasury To further enhance opportunities for other paper manufacturers to offer to provide currency paper to the government and to obtain offers that represent the best value to the government for the paper, the Secretary of the Treasury should ensure that all future currency paper procurements reflect the expected amounts of paper needed and orders against contracts are for consistent amounts. This would allow the supplier(s) to maintain a steady production level and stabilize workforce levels.
Closed – Implemented
On March 14, 2002, the BEP said that the agency issued a paper solicitation in November 2001, based on the amount of paper needed on the best available estimate provided by the Federal Reserve for currency for a 4-year period.
Department of the Treasury The Secretary of the Treasury should ensure that the government obtains royalty-free data rights to any future security measures incorporated into currency paper.
Closed – Not Implemented
Treasury did not change how it incorporates security measures in its currency paper procurements.

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Topics

Buy national policyCompetitive procurementCurrency and coinageExclusion of sourcesFederal procurementPrices and pricingPrinting or duplicatingProcurement practicesSole source procurementSurveys