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entitled 'Coin and Currency Production: Issues Concerning Who Should
Provide Security' which was released on July 18, 2003.
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Report to the Subcommittee on Domestic and International Monetary
Policy, Trade, and Technology, Committee on Financial Services, House
of Representatives:
July 2003:
Coin and Currency Production:
Issues Concerning Who Should Provide Security:
GAO-03-696:
GAO Highlights:
Highlights of GAO-03-696, a report to the Subcommittee on Domestic and
International Monetary Policy, Trade, and Technology, Committee on
Financial Services, House of Representatives
Why GAO Did This Study:
The U.S. Mint and the Bureau of Engraving and Printing (BEP), which
produce the nation’s coins and currency, provide their own security
and have experienced some problems with theft by employees. Although
security is necessary to carry out the agencies’ missions, their
primary function is producing money. In light of these thefts, a
congressional committee asked GAO whether the Mint and BEP should
continue to provide their own security or whether the United States
Secret Service should provide their security.
Among the issues that GAO was asked to address were (1) how do the
Mint, BEP, and other organizations that produce or handle large
amounts of cash provide their security; (2) what thefts have occurred
at the Mint and BEP and what steps have they taken to prevent thefts
from recurring; and (3) what are the potential benefits and costs of
having the Secret Service provide Mint and BEP security?
The Mint said it generally agreed with the findings and conclusions
that applied to the Mint. BEP and the Secret Service provided
technical comments regarding the report, which GAO incorporated where
appropriate, but had no overall comments on the report.
What GAO Found:
The Mint and BEP use their own police forces to provide security.
Eight of the 12 coin and currency organizations in the other G7
nations responded to our requests for information. Four organizations
reported that they only used their own security forces; 2
organizations said they used their own security forces supplemented
with contractor personnel; 1 organization said it used an outside
agency to supplement its own security force; and 1 organization said
that it used an outside agency to provide its security. Private
businesses that handle large amounts of cash, such as banks and
casinos, that we contacted said they used either their own security
staff or contractor staff.
The Mint and BEP have experienced some thefts by employees over the
last decade. The Mint, which did not have records of security
incidents that occurred more than 5 years ago, reported 74 incidents
of theft involving about $93,000 from 1998 though 2002, while BEP
reported 11 incidents of theft from 1993 through 2002 involving about
$1.8 million. Both the Mint and BEP had threat assessments made of
their facilities and processes and took corrective action to enhance
security.
The Secret Service said that if its Uniformed Division were charged
with the responsibility of protecting the Mint and BEP, the two
agencies could benefit from the Secret Service’s expertise in
protection and criminal investigations. However, unlike Secret Service
police officers, Mint and BEP security personnel are already familiar
with the coin and currency production processes, which is a benefit in
identifying security risks in these manufacturing facilities. Further,
if the Secret Service protected the Mint and BEP, the government could
incur additional costs because the Secret Service requires more
training for its officers than the Mint and BEP police. The Secret
Service police officers also are provided more costly retirement
benefits than the Mint and BEP police.
www.gao.gov/cgi-bin/getrpt?GAO-03-696.
To view the full report, including the scope and methodology, click on
the link above. For more information, contact Bernard Ungar at (202)
512-2834 or ungarb@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
How Security Is Provided at the Mint, BEP, and Selected Other
Organizations:
Thefts at the Mint and BEP and Steps They Have Taken to Prevent Such
Incidents:
Potential Benefits and Costs of Having the Secret Service Provide Mint
and BEP Security:
Agency Comments:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Data Concerning the U.S. Mint and the Bureau of Engraving
and Printing Police Forces:
Appendix III: Data Regarding the United States Secret Service’s
Uniformed Division:
Appendix IV: Comments from the U.S. Mint:
Abbreviations:
BEP: Bureau of Engraving and Printing:
CSRS: Civil Service Retirement System:
DHS: Department of Homeland Security:
FERS: Federal Employees Retirement System:
FLETC: Federal Law Enforcement Training Center:
FPS: Federal Protective Service:
GSA: General Services Administration:
OPM: Office of Personnel Management:
TSA: Transportation Security Administration:
Letter July 18, 2003:
The Honorable Peter T. King
Chairman
The Honorable Carolyn B. Maloney
Ranking Minority Member
Subcommittee on Domestic and International Monetary Policy, Trade, and
Technology
Committee on Financial Services
House of Representatives:
The U.S. Mint and the Bureau of Engraving and Printing (BEP)--
Department of the Treasury agencies that produce the nation's coins and
currency--have experienced some thefts in the last decade by their
employees, including the theft of about $1.6 million in test
currency[Footnote 1] from BEP in 1994. The government's money producing
facilities are also considered by law enforcement officials to be
potential terrorist targets because of their symbolic importance and
role in the U.S. economy. During fiscal year 2002, the Mint produced
and shipped about 15 billion circulating coins, and BEP produced and
shipped about 7.1 billion Federal Reserve notes. Although the primary
mission of the Mint and BEP is to produce money, they also provide
their own security.
In light of these thefts by Mint and BEP employees, you asked us to
review (1) how security is provided at the Mint and BEP and how that
compares with the security arrangements at coin and currency producing
organizations in other countries and at businesses that handle large
amounts of money, (2) what thefts have occurred at the Mint and BEP in
recent years and what steps have been taken to prevent thefts from
recurring, and (3) what are the potential benefits and costs of having
the United States Secret Service provide Mint and BEP security?
To address these questions, we obtained and reviewed Mint, BEP, and
Secret Service police job classifications, application and training
requirements, and salaries and benefits; thefts that occurred from
1998
through 2002[Footnote 2] at the Mint and from 1993 through 2002 at BEP;
crimes that occurred and arrests that were made from 1993 through 2002
at buildings protected by the Secret Service's Uniformed Division; and
government and consultant security assessments of Mint and BEP
security. We sought information from the other G7 nations (Canada,
France, Germany, Italy, Japan, and the United Kingdom) regarding the
security arrangements at their 12 money producing facilities and
received responses from 8 organizations in those countries. Further, we
verified whether recommendations for security improvements at the Mint
and BEP had been implemented. In addition, we interviewed officials
from the Mint, BEP, Secret Service, and the Federal Reserve System and
representatives from selected businesses, such as banks and casinos,
that handle a large amount of cash about their security arrangements.
We did our work in Washington, D.C; Philadelphia, Pennsylvania; and
Ft. Knox, Kentucky, in accordance with generally accepted government
auditing standards and investigative standards established by the
President's Council on Integrity and Efficiency from July 2002 through
June 2003. Our detailed scope and methodology are contained in appendix
I.
Results in Brief:
The Mint and BEP use their own police forces to protect the money they
produce and its facilities and employees. Eight of the 12 coin and
currency organizations in the other G7 nations responded to our
requests for information. Four organizations reported that they only
used their own security forces; 2 organizations said they used their
own security forces supplemented with contractor personnel; 1
organization said it used an outside agency to supplement its own
security force; and 1 organization said that it used an outside agency
to provide its security. The six casino and banking companies that we
contacted handle large amounts of cash, and they used either their own
security staff or contractor staff. In general, the businesses that
used their own employees to provide security said they did so to
maintain greater control over their security operations, while the
businesses that used contract security personnel generally said they
did so because it was less costly.
The Mint reported that about $92,862 of government property, primarily
coins, was stolen from 1998 through 2002, involving 74 incidents. This
amount includes the market value of coins with production errors that
were stolen from the Mint. BEP reported 11 incidents of theft from 1993
through 2002 totaling about $1.8 million, including 1 theft of $1.6
million in currency by an employee in 1994. According to Mint and BEP
security officials, the thefts that occurred did not happen because of
deficiencies in the existing security forces, but were the result of
breaches of trust by employees. Moreover, the Mint and BEP have had
outside organizations review their security and assess threats and make
recommendations for improvements. The Mint has taken measures to
prevent employee thefts, such as improving internal controls and
accountability over the production of coins with errors, which are
valuable to coin collectors. Among the measures that BEP has taken to
prevent employee thefts are implementing camera surveillance of
production employees and reducing the amount of money in the vault
where $1.6 million was stolen in 1994. We did not identify any major
security gaps that the Mint and BEP are not currently addressing.
According to the Secret Service, if it were given the responsibility of
protecting the Mint and BEP, the two agencies could benefit from the
Secret Service's expertise in protection and criminal investigations.
However, the disadvantages of using the Secret Service are that
additional costs could be incurred for initial training and retirement
benefits. Further, unlike Secret Service police officers, Mint and BEP
security personnel are familiar with the coin and currency production
process, which is a benefit in identifying security risks in such
manufacturing facilities. An alternative regarding the Mint and BEP
police forces would be to transfer them to a new, separate unit of the
Uniformed Division. Under this alternative, the existing Mint and BEP
police forces would become a second tier of the Uniformed Division and
would be trained, supervised, and managed by the Secret Service. A
potential advantage of this arrangement would be that the separate unit
possibly could be used as a stepping-stone for Mint and BEP police who
would like to become Uniformed Division officers. Further, this
arrangement could streamline activities, such as procurement, training,
and recruitment, that may save the government money. However, creating
two tiers of Uniformed Division officers with different hiring
standards, retirement benefits, and collective bargaining rights could
cause problems with morale. According to the Secret Service, because of
the differences in the hiring standards between the Uniformed Division
and the Mint and BEP police, the stepping-stone concept for the Mint
and BEP police officers would be impractical and the Secret Service
would not use them in fulfilling its other protective responsibilities.
In addition, placing responsibility for the security of the Mint and
BEP in a separate agency that is not part of the Treasury Department
could hinder the responsiveness of the security personnel to the Mint
and BEP. The Secret Service said that this alternative offers no
advantages to the Secret Service; would place additional financial,
manpower, and other administrative burdens on the agency; and would
dilute the Uniformed Division's protective mission.
In commenting on a draft of this report, the Mint said it generally
agreed with the findings and conclusions that applied to the Mint. BEP
and the Secret Service had no overall comments on the draft report.
Background:
The Mint and BEP, which are part of the Treasury Department, produce
the nation's coins and currency. The Mint primarily produces
circulating coins in Denver, Colorado, and Philadelphia. It also makes
numismatic coins and medals and stores over $100 billion in government
precious metals at facilities in Denver; Fort Knox; Philadelphia; San
Francisco, California; Washington, D.C; and West Point, New York. BEP
produces (1) the nation's currency for the Federal Reserve System, (2)
many security documents that the federal government issues, and (3)
some postage stamps. Its production facilities are in Washington, D.C.,
and Ft. Worth, Texas. During fiscal year 2002, the Mint produced and
shipped about 15 billion circulating coins at a cost of $430.9 million,
including $47.2 million for security. BEP produced and shipped about
7.1 billion Federal Reserve notes in 2002 at a cost of $376.7 million,
including $33.2 million for security.
The authority of the Mint and BEP to establish police forces is derived
from 40 U.S.C. § 1315, which provides the Mint and BEP police with
powers to enforce federal laws and regulations for the protection of
individuals and property, including making arrests and carrying
firearms. Prior to the enactment of the Homeland Security Act of 2002,
the Administrator of the General Services Administration (GSA), through
GSA's Federal Protective Service (FPS), was responsible for policing
government buildings under GSA's control and had delegated this
responsibility to the Secretary of the Treasury who redelegated it to
the Mint and BEP. Although the Homeland Security Act amended 40 U.S.C.
§ 1315 by transferring responsibility for this policing authority to
the Secretary of the Department of Homeland
Security (DHS),[Footnote 3] the savings provisions in the act state
that the existing delegations will continue to apply.[Footnote 4]
Additional security legislation found in Public Law 104-208 (1996)
provides Mint and BEP police officers with the authority to carry out
their duties on Mint and BEP property and the surrounding areas and
while transporting coins, currency, and other agency assets.[Footnote
5]
The primary mission of the Secret Service is to protect the President
and other individuals, enforce the nation's counterfeiting laws, and
investigate financial crimes. In carrying out this mission, the Secret
Service's Uniformed Division also protects the buildings in which the
people it protects are located, such as the White House complex, the
Treasury Department headquarters building and annex, the Vice
President's residence, and foreign diplomatic missions. The Uniformed
Division has statutory authority to carry out its duties under 3 U.S.C.
§ 202 and 18 U.S.C. § 3056, including the power to make arrests, carry
firearms, and execute warrants issued under the laws of the United
States. The Secret Service's jurisdiction extends throughout the United
States on mission-related work.
How Security Is Provided at the Mint, BEP, and Selected Other
Organizations:
The Mint and BEP use their own police forces to protect their
facilities and the money they produce. Eight of the 12 coin and
currency organizations in the other G7 nations responded to our
requests for information. Four organizations reported that they only
used their own security forces; 2 organizations said they used their
own security forces supplemented with contractor personnel; 1
organization said it used an outside agency to supplement its own
security force; and 1 organization said that it used an outside agency
to provide its security. The six casino and banking businesses that we
contacted, which handle large amounts of cash, used either their own
security staff or contract staff. In general, the businesses that used
their own employees to provide security said they did so to maintain
greater control over their security operations, while the businesses
that used contract security personnel generally said they did so
because it was less costly.
Mint and BEP Police Forces:
As of March 2003, the Mint had 381 police officers. It also employed 38
people to provide administrative support for its security operations.
BEP had 209 police officers as of March 2003. It also employed 36
people to provide administrative support for its security operations.
In addition, BEP employed 79 security specialists, investigators, and
security managers who BEP does not count as police officers, but who
are licensed and trained to carry firearms and can provide back-up for
the police. BEP conducts most of its own background investigations,
while the Mint contracts out this work.[Footnote 6]
The Mint and BEP police primarily provide security by guarding entry
and exit at the agencies' facilities and conducting electronic
surveillance. In contrast to the Secret Service, which is concerned
primarily with protecting individuals and, as part of that mission,
controlling public access into protected facilities, the Mint and BEP
police are focused on preventing employees from taking coins and
currency from the facilities. Both the Mint and BEP police use outside
experts to conduct threat assessments regarding their facilities and to
make recommendations for security improvements.
The Mint and BEP police provide security for production facilities that
are not located in the same cities. The Mint police provide protection
at the primary coin production facilities in Denver and Philadelphia;
the facilities in San Francisco and West Point, which produce
numismatic coins; the Ft. Knox facility, where gold and other precious
metals are stored; and the Mint's Washington, D.C., headquarters. The
BEP police provide protection at BEP's Washington, D.C., headquarters
and at currency production facilities in Washington, D.C., and Ft.
Worth.
Because both the Mint and BEP protect money producing facilities, the
two agencies have considered merging their police forces. According to
the Mint, a combined police force could exercise greater flexibility in
deploying security personnel in response to emergencies. However, the
Mint also said that (1) because of the geographic dispersion of the
Mint's and BEP's production facilities, the number of police positions
that could be eliminated through a merger of the police forces would be
limited and (2) all Mint and BEP police officers would have to be
trained in the security aspects of both the coin and currency
production processes.
BEP management was opposed to merging the Mint and BEP police forces
because the centralization of the forces would not necessarily lead to
a more effective security effort, and these officials raised questions
regarding managerial controls, allocation of resources and funds, and
accountability. BEP management noted that because Mint and BEP
production facilities are not located in the same cities, local
supervision still would be needed at each facility.
Although the Mint and BEP are not pursuing a merger of their police
forces, they are considering sharing certain security-related
functions. In April 2003, Mint and BEP officials met to discuss the
sharing of security-related services and agreed to share intelligence
information, and they are studying the feasibility of jointly
conducting drug testing and background investigations.
Appendix II provides specific information regarding Mint and BEP police
forces in terms of the facilities they protect, job classifications,
number of police, application requirements, starting salaries,
attrition rates, and training requirements.
Security Arrangements at Money Producing Facilities in Other Countries:
We sent questionnaires to both the coin and currency producing
organizations in the six other G7 nations (Canada, France, Germany,
Italy, Japan, and the United Kingdom) requesting information about who
provides their security and whether they had experienced thefts from
1993 through 2002. Eight of the 12 coin and currency producing
organizations responded to our requests for information. Four
organizations reported that they only used their own security forces; 2
organizations said they used their own security forces supplemented
with contractor personnel; 1 organization said it used its own security
force and personnel from the country's customs agency; and 1
organization said that the country's Ministry of Defense provided its
security.
Two of the 8 organizations reported that they had experienced thefts of
$1,000 or more over the last 10 years; 1 of those organizations was
protected by its own security force, and the other was protected by the
country's Ministry of Defense. The organization that was protected by
its own security force reported experiencing two thefts. One incident
involved an employee's theft of gold that was worth about $40,000. The
other incident involved two employees' theft of error coins worth about
$1,000 to coin collectors. The second organization, which was protected
by the country's Ministry of Defense, reported that currency worth
about $40,200 was stolen from its facilities. The other 6 organizations
that responded said they had not experienced any thefts of $1,000 or
more over the last 10 years.
Security Arrangements at Businesses that Handle Large Amounts of Cash:
We contacted four banks and two casinos regarding who provides their
security and why because, like the Mint and BEP, these entities also
handle large amounts of cash. The security director for one banking
company said that it only uses its own security guards in its major
cash vault facilities, which may contain hundreds of millions of
dollars. He said that from his company's assessment of risk factors and
experiences, it appeared that its own well-trained, well-paid security
guards are more dependable, reliable, and honest than contract guards.
The security directors at the three other banks we interviewed said
that they used contract security personnel to provide their security
because of the cost advantages compared with hiring in-house staff. Of
those three companies that used contract guards, one also used in-house
staff to supervise contract personnel and to guard its cash vault
operations.
Security directors from two major casino companies both said that they
employ their own security staff, rather than using contract staff. The
security director of the first company said that using its own security
staff provides the company with more control, for example, by
conducting background investigations on staff to ensure their
suitability. Similarly, the security director of the second company
said that it is difficult to maintain supervisory control or take
corrective actions over contract security officers.
Security Arrangements at the Federal Reserve System:
The Federal Reserve System, the nation's central bank, employs its own
police force.[Footnote 7] Security personnel were granted federal law
enforcement authority under the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot) Act of 2001.[Footnote 8] A Federal Reserve
security official said that the Federal Reserve preferred to use its
own police force because it is important to (1) know the officers and
their training and capabilities and (2) have the police force under its
management control. The Federal Reserve reported that it had
experienced 12 internal thefts by its employees in the past 10 years
totaling $516,080, of which $239,562 has been recovered to
date.[Footnote 9]
Thefts at the Mint and BEP and Steps They Have Taken to Prevent Such
Incidents:
We asked the Mint and BEP to provide information regarding thefts that
occurred over the last decade. We reviewed these incidents with Mint
and BEP security officials in terms of what happened, why, and how they
occurred, and what steps have been taken to prevent thefts from
recurring. According to Mint and BEP security officials, the thefts did
not occur because of deficiencies in the existing security forces, but
were the result of breaches of trust by employees. Further, both the
Mint and BEP have had threat assessments conducted regarding their
facilities and have generally implemented the recommendations that were
made to improve security. As a result, it does not appear that the Mint
and BEP have major security gaps that they are not currently
addressing.
Thefts at the Mint:
Although we requested that the Mint provide information on thefts that
occurred during the past 10 years, the Mint indicated that it did not
have records of thefts that occurred more than 5 years ago and provided
records regarding incidents that occurred from 1998 through 2002. The
Mint's records indicated that about $92,862 of government property
(primarily coins) was stolen during that time, including $80,000 total
market value of coins with production errors ("error coins") that a
Mint employee stole from 1998 through 2000.[Footnote 10] The records
reflected 74 reports of theft that occurred both inside and outside of
Mint facilities. They also indicated that two employees were convicted
of stealing from the Mint; an employee who stole 400 to 500 error coins
was sentenced to prison, and another employee who was caught stealing
35 1-dollar coins was sentenced to probation.
Mint records indicated that about $82,357 of property (primarily coins)
was reported stolen from inside Mint facilities from 1998 through 2002,
involving 28 incidents, including the following:
* the theft by an employee of 400 to 500 coins, including error coins
with a total value to coin collectors of about $80,000, and:
* 27 other incidents involving the theft of $2,357 of coins and
government property, such as office and production equipment, including
10 incidents involving coins found on employees or contractors with a
face value of at least $36.[Footnote 11]
Outside of Mint facilities, about $10,505 in government property was
reported stolen, involving 46 incidents, including the following:
* 33 reports from Mint customers who claimed that they did not receive
coins sent through the mail, valued at $6,357;
* 9 reports of other stolen property, such as coins, coin blanks (coins
that have not yet been stamped), and office equipment, valued at
$1,356;
* 3 reports of penny blanks that were stolen from rail cars in 1999 and
2000, valued at about $592;[Footnote 12] and:
* 1 report of $2,200 in nickels that were stolen while being
transported by truck in 2000.
We asked the Mint Police Chief whether the thefts occurred due to
deficiencies in the police force and what has been done to prevent
thefts from recurring. The Police Chief said that the incidents
occurred because of an abuse of trust by employees, which he said that
no police force could prevent. Regarding the most serious incident--the
theft of 400 to 500 coins by a Mint employee from 1998 through 2000--
the Police Chief said that this occurred when the Mint was producing a
high volume of coins and new production equipment was installed at the
Philadelphia facility, which began producing large numbers of error
coins. He said that thousands of error coins were on the production
floor during this period. He also said that because the first coin made
in a batch was not being checked before continuing a production run,
many error coins were produced before corrections were made to the
equipment. The Police Chief said that the employee was able to take the
coins out of the Mint facility over that 3-year period because he did
not exceed the threshold set to trigger the metal detectors.
The steps that the Mint took to prevent thefts from recurring did not
involve improvements to the police force, but concerned improved
internal controls and production procedures. For example, to prevent
thefts of error coins, the Mint has required that the first coin
produced in a batch be checked for errors; that new equipment be used
to quickly destroy error coins once they are made, rather than having
them brought to the metal fabricator to be melted; that a report be
prepared and provided to the police chief each time an error coin is
produced; and that error coins be locked up. The Mint also is in the
process of sealing off the production areas from the rest of the
production facility. In addition, the Mint is considering requiring
production employees to wear uniforms, which would not have pockets or
pants cuffs where coins could be hidden.
Regarding the coins that Mint customers purchased, but claimed that
they did not receive, the Mint's Police Chief said the Mint has joined
the U.S. Postal Service's interagency fraud group, which helps to
identify postal addresses that could be used to fraudulently order
coins. Regarding the theft of coins while being transported, the Mint
Police Chief said that coins are transported by contractors and that
the government is fully insured for their loss. The Police Chief said
that the Mint tries to minimize thefts by employees by having
background investigations conducted on personnel hired and by severely
punishing those who are caught stealing.
The Mint indicated that it conducts threat assessments of its
facilities every 5 years. In December 2000, Sandia National
Laboratories assessed Mint facilities and made 42 recommendations to
improve security in its report. None of these recommendations pertained
to improvements in the police force, for example, in terms of the
officers' training or skills.
In February and March 2003, we visited the Mint's Philadelphia and Ft.
Knox facilities and found that 9 of the 13 recommendations contained in
the Sandia report pertaining to those facilities were fully
implemented. Of the 4 recommendations that had not been implemented,
the Mint indicated that it plans to implement 3 of them. The fourth
recommendation had not been implemented because the Mint believed, and
we agreed, that it detracted from, rather than enhanced, security. The
Mint is also in the process of conducting other security reviews in
connection with countering possible terrorist threats.[Footnote 13] To
avoid possibly compromising security, we are not discussing in this
report the specific subjects of the ongoing reviews or the specific
security recommendations contained in past assessments.
We also contacted two coin dealers who specialize in buying and selling
error coins to ask about the recent circulation of such coins. The head
of one firm said that the number of error coins that he has seen has
dropped significantly since the spring of 2001. The head of the other
firm said that he is now seeing the fewest number of error coins in
decades.
Thefts at BEP:
BEP reported 11 incidents of theft from 1993 through 2002 involving
about $1.8 million.[Footnote 14] According to BEP, seven employees were
convicted of theft in connection with these incidents, including one
employee who was sentenced to prison, and about $1.5 million of the
stolen money was later recovered. The incidents included the theft of:
* $1,630,000 in test $100 bills from BEP's Advanced Counterfeit
Deterrence Vault by a program manager in 1994 ($1.3 million of the
stolen money was later recovered);
* $60,000 from a Federal Reserve vault inside BEP facilities by three
BEP employees in 1995;
* $30,000 in blank, engraved $100 bills in 2001 by the former BEP
currency production chief;
* $20,960 worth of stamps by a postage stamp worker in 1996, which was
recovered;[Footnote 15]
* $2,000 (100, $20 notes) by a machine operator in 1993 (most of which
were later recovered);
* a 32-note sheet of $10 blank engraved notes by a contract cleaning
employee in 1993; and:
* $25 in worn and soiled currency in 1999 by a currency examiner, who
also admitted to taking $250 on one occasion and $400 on two other
occasions.
No suspects were identified with respect to four other security
incidents. Three of the four incidents involved $5,500 in currency that
was reported missing from BEP facilities in 1997 and 1998. The fourth
incident involved the recovery from Atlantic City casinos in 1996 and
1997 of $16,000 in unfinished notes produced by BEP.
We asked BEP's Security Chief whether the thefts occurred because of
deficiencies in the police force and what has been done to prevent
thefts from recurring. The Security Chief said that the incidents did
not occur because of deficiencies in the police force, but were due to
a breach of trust by employees. Further, he said that bags and purses
that employees carry with them to work are subject to search when
leaving the facilities without first establishing probable
cause,[Footnote 16] but that BEP police need to establish probable
cause before searching an employee. Further, he pointed out that in
some cases, the currency and postage stamps that employees attempted to
steal did not leave BEP facilities because the police were effective in
preventing removal of the items.
BEP's Security Chief said that the measures taken to prevent the
recurrence of thefts include implementing the video surveillance of
production staff, reducing the amount of money in the vault where $1.6
million was stolen in 1994, increasing the number of layers of wrap
surrounding the currency after it is produced, rewrapping currency in
the presence of security personnel when the original wrap has been
damaged due to handling, increasing the number of police patrols in
certain areas, having currency transported by a least two authorized
personnel, and having the word 'TEST' imprinted on test currency.
In June 1994, following a BEP employee's theft of $1.6 million in test
currency from BEP's Washington, D.C., production facility, the Treasury
Department directed that steps be taken to improve the security and
internal controls at BEP, including an in-depth physical security
review to be conducted by the Secret Service. In December 1994, the
Secret Service completed its review and recommended 343 security
improvements at BEP. Also, BEP contracted with KPMG Peat Marwick to
review internal controls at BEP's production facilities. In January
1995, KPMG made 134 recommendations for internal control improvements.
Further, in September 1999, BEP contracted with the consulting firm
Kelly, Anderson:
& Associates[Footnote 17] to review, evaluate, and document security
and internal control corrective actions taken by BEP. Kelly Anderson
reported in February 2000 that 19 of the Secret Service's
recommendations and 7 of the KPMG recommendations needed additional
effort. In February and March 2003, we found that BEP had fully
implemented 14 of the 19 Secret Service recommendations and is in the
process of implementing another. BEP indicated that it did not intend
to fully implement the other 4 recommendations (3 of the 4 were
partially implemented) for cost and other reasons, which we did not
believe to represent major gaps in security. We selected a random
sample of 20 other Secret Service recommendations that were identified
as being high risk and KPMG recommendations pertaining to that facility
and verified that they had been implemented.
Three of the Secret Service recommendations directly pertained to the
police force. Two of the recommendations were to improve police
training, and the third was to improve background checks on police
before they are hired. Kelly Anderson reported in 2000 that these
recommendations were fully implemented.
BEP's Security Chief said that, in addition to the agency's ongoing
assessments of terrorist-related threats, BEP is planning to have a
contractor further assess terrorist threats and possible
countermeasures. To avoid possibly compromising security, we are not
discussing in this report what the future threat assessment would
encompass or the specific security recommendations contained in past
assessments.
Potential Benefits and Costs of Having the Secret Service Provide Mint
and BEP Security:
According to the Secret Service, if it were given the responsibility of
protecting the Mint and BEP, those agencies could benefit from the
Secret Service's expertise in protection and criminal investigations.
However, unlike the Secret Service's Uniformed Division, the Mint and
BEP police are already familiar with the coin and currency production
processes, which is an advantage in identifying security risks. In
addition, the government would incur additional costs for the initial
training of police and retirement benefits if the Secret Service
assumed responsibility for protecting the Mint and BEP.
Secret Service's Uniformed Division:
The Secret Service's Uniformed Division consists of police officers
whose duties are focused on the agency's protective responsibilities,
which are to protect the President and other individuals. As of
February 2003, the Uniformed Division had 1,106 officers. The Secret
Service requires Uniformed Division officers to obtain top-secret
security clearances and submit to a polygraph test, which the Mint and
BEP do not. The Secret Service also requires its officers to receive
more initial training than the Mint and BEP police, and the Secret
Service's training is focused on its protective mission. Appendix III
provides Uniformed Division data regarding facilities that the Secret
Service officers protect, number of police, application requirements,
starting salaries, attrition rates, and training requirements.
We asked the Secret Service to provide data on the number and types of
crimes and arrests that had occurred at the White House complex (which
includes the White House, the Eisenhower Executive Office Building, and
the New Executive Office Building) and the adjacent Treasury Department
headquarters building and annex during the last 10 years. It reported
an average of 1,574 incidents each year at these facilities from 1993
through 2002. The Secret Service reported, for example, in 2002, 34
arrests, 30 bomb threats, 5 demonstrations, 177 incidents of weapons
(not firearms) found during magnetometer checks, 3 fence jumpers and
unlawful entries, and 44 suspicious packages and vehicles.[Footnote 18]
We also asked the Secret Service to break down the types of arrests
that were made at the White House complex and the Treasury Department
headquarters and annex during the past 10 years. The data indicated
that from 1993 through 2002, the Secret Service made 72 arrests for
unlawful entry, 66 of which were in the White House complex, and 25
arrests for theft in the area surrounding the White House complex (none
of the arrests for thefts were reported as having occurred within the
White House complex or the Treasury Department building).
In providing the data regarding the number of security incidents that
occurred at facilities protected by the Secret Service, the Secret
Service emphasized that the Uniformed Division has a different mission
than the Mint and BEP. The Secret Service said that the Uniformed
Division is concerned primarily with protecting individuals and, as
part of that mission, controlling public entry into its protected
facilities. By comparison, the Mint and BEP police forces are concerned
primarily with the theft of coins and currency by their agencies' own
employees from their respective facilities. According to the Secret
Service, this difference between the missions of the Uniformed Division
and the Mint and BEP is substantial and unique, and to compare data
regarding the number of security incidents that occurred at facilities
protected by the Uniformed Division and the Mint and BEP would result
in an unfair analysis of the abilities and actions of the Uniformed
Division. We are not implying that these data are similar or
comparable; we present these data to illustrate the differences between
the types and number of security incidents that are handled by the
Secret Service and the Mint and BEP, which reflect their different
missions, and to show that facilities protected by the Secret Service
are not crime-free.
The Chief of the Uniformed Division said that assuming the additional
responsibility of protecting the Mint and BEP would result in the
dilution of the Secret Service's core protective responsibilities. He
said that giving the Secret Service responsibility for the security of
Mint and BEP facilities would divert from the agency's core protective
mission and would cause a staffing shortage. Further, he said that it
would not be in the Secret Service's best interests to take on the
additional responsibility of providing security for the Mint and BEP at
a time when the effect of transferring the Secret Service from the
Treasury Department to DHS is undetermined.
Mint and BEP officials were opposed to having an outside law
enforcement agency assume responsibility for their security functions
because they said that security is best accomplished by their own
employees who are familiar with the agencies' internal operations and
the coin and currency production processes. Mint and BEP officials also
said that their police officers have opportunities for advancement
through promotion to supervisory positions. BEP also said that police
are encouraged to transfer into career security positions, such as
general investigator and security specialist. However, they also said
that a larger agency such as the Secret Service may offer more
opportunities for advancement. We asked the Secret Service to provide
data on the number of Uniformed Division officers who had become
special agents at the agency from fiscal years 1998 to 2002 and found
that relatively few officers had become agents. (Duties of special
agents include investigation and protection, while the mission of
Uniformed Division officers is focused on protection.) The data
indicated that an average of 21 officers had become special agents each
year during that 5-year period out of an average Uniformed Division
workforce of about 1,040 officers, or about 2 percent.
If the Mint and BEP police became part of the Uniformed Division and
there was a rotation of duties, the Secret Service's mission of
protecting the president and providing security at national special
security events could be more appealing to some police officers,
compared with the routine nature of protecting Mint and BEP facilities.
The Mint's Police Chief said that, to provide variety in the work of
Mint police officers and to increase morale, up to 50 Mint police
officers a year help the Uniformed Division perform duties at special
events--for example, at the Olympics.
Potential Costs Associated with Having the Secret Service Protect the
Mint and BEP:
If the Secret Service protected the Mint and BEP, the government could
incur additional costs because the Secret Service requires more initial
training for its officers than the Mint and BEP police, Uniformed
Division officers can retire with less government service than the Mint
and BEP police, and the Secret Service would have to increase
management and overhead to handle the additional workforce. Further, it
is unknown how many Mint and BEP police officers would be able to meet
the Secret Service's hiring standards or what the costs would be of
absorbing these officers into the Secret Service's retirement system.
The Uniformed Division provides new hires with 6 more weeks of initial
training than the Mint police and 1 more week of training than the BEP
police. The Uniformed Division spends an average of $20,033 per officer
for initial training, compared with $16,306 per officer at the Mint and
$18,791 per officer at BEP.
The government also could be expected to incur higher retirement costs
if the Secret Service protected the Mint and BEP because Uniformed
Division officers receive federal law enforcement retirement benefits,
which allows them to retire after 20 years of service at age 50 or at
any age with 25 years of service.[Footnote 19] By comparison, Mint and
BEP police receive standard retirement benefits for federal employees,
which generally allow them to retire after 30 years of service at age
55 if covered by the Civil Service Retirement System (CSRS) or after 30
years of service under the Federal Employees Retirement System
(FERS).[Footnote 20] Agency contributions for employees receiving
federal law enforcement retirement benefits are 31.4 percent for
employees in CSRS and 22.7 percent for employees in FERS. By
comparison, agency contributions for employees receiving standard
retirement benefits are 17.4 percent for employees in CSRS and 10.7
percent for employees in FERS. Further, because employees receiving
federal law enforcement retirement benefits may retire sooner than
those who do not receive such benefits, it is likely that there would
be higher turnover in the police force, resulting in the need to train
more officers and, thus, in higher training costs over time.
If the Secret Service assumed responsibility for protecting the Mint
and BEP and added 590 officers to its Uniformed Division to carry out
that responsibility, the size of the Uniformed Division's police force
of 1,106 officers would increase by about 50 percent. Such an increase
would likely require the Secret Service to add additional overhead and
resources to manage the additional workforce. However, there also could
be an offset by reducing or possibly eliminating similar positions at
the Mint and BEP. It was not possible to estimate during our review
what additional people and facilities would be needed or what cost
would be incurred.
In addition, if the Secret Service assumed responsibility for
protecting the Mint and BEP, it is unknown how many of the Mint and BEP
police would qualify to become part of the Uniformed Division,
considering that applicants to become Uniformed Division officers are
required to submit to a polygraph test and obtain top-secret security
clearances, which are not required for Mint and BEP police. According
to the Secret Service, for example, a substantial number of applicants
for the position of Uniformed Division officer are rejected at the
polygraph stage of the process. The Secret Service also requires
applicants to meet certain physical fitness standards. Lastly, for
those Mint and BEP police hired by the Uniformed Division, there would
be a cost of including them in the federal law enforcement retirement
plan. According to the Office of Personnel Management, it could cost
the government an estimated $72.7 million (in present value dollars) if
the entire existing Mint and BEP police forces were given law
enforcement retirement benefits. This computes to an average of about
$123,000 per officer. Because it was not possible to determine how many
of the existing Mint and BEP police officers would be absorbed by the
Uniformed Division, we could not estimate how much this would cost.
An alternative regarding the Mint and BEP police forces would be to
transfer them to a new, separate unit of the Uniformed Division. Under
this alternative, the existing Mint and BEP police forces would become
a second tier of the Uniformed Division and would be trained,
supervised, and managed by the Secret Service. One potential advantage
of this arrangement would be that the separate unit possibly could be
used as a stepping-stone for Mint and BEP police who would like to
become Uniformed Division officers. Further, this arrangement could
streamline activities, such as procurement, training, and recruitment,
that may save the government money. For example, a unified police force
could help recruiting efforts by being able to offer a variety of
duties and duty stations. However, according to the Secret Service,
because of the differences in the hiring standards between the
Uniformed Division and the Mint and BEP police, the stepping-stone
concept for the Mint and BEP police officers would be impractical and
the Secret Service would not use them in fulfilling its other
protective responsibilities. The Secret Service said that this
alternative offers no advantages to the Secret Service; would place
additional financial, manpower, and other administrative burdens on the
agency; and would dilute the Uniformed Division's protective mission.
Further, Uniformed Division officers receive federal law enforcement
retirement benefits, while Mint and BEP police do not.
The Mint and BEP police are covered by the labor management and
employee relations provisions set forth in Chapter 71 of Title 5 of the
United States Code, while the Secret Service employees are exempt from
these provisions pursuant to 5 U.S.C. § 7103 (a)(3)(H). According to
the Secret Service, if the Mint and BEP forces became a separate unit
of the Uniformed Division, this would create animosity in the agency
because the Mint and BEP police would have collective bargaining rights
while Uniformed Division officers would not. The Mint said that because
Uniformed Division officers receive federal law enforcement retirement
benefits and the Mint and BEP police do not, the substantial disparity
in the compensation between the Mint and BEP police officers and the
Uniformed Division would create problems with morale and performance.
In addition, the Mint said that placing responsibility for security in
a separate agency that is not part of the Treasury Department could
hinder the responsiveness of the security personnel to the Mint and
BEP. According to BEP, because of the difference in hiring standards
between the Uniformed Division and the Mint and BEP police forces, the
Mint and BEP police forces comprising the second tier would always feel
less than equal, which would also affect morale and create poor job
performance.
Agency Comments:
We provided copies of a draft of this report to the Directors of the
Mint, BEP, and Secret Service for comment. On June 30, we received
written comments from the Director of the Mint, which are reprinted in
appendix IV. The Mint Director said that the Mint concurred with the
findings and conclusions that apply to the Mint. BEP and Secret Service
liaisons with GAO provided by E-mail technical comments regarding the
draft report, which we incorporated where appropriate, but did not
provide overall comments on the report.
:
We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Banking, Housing, and Urban
Affairs, the House Committee on Financial Services, and the House
Select Committee on Homeland Security; the Secretary of the Treasury;
the Secretary of the Department of Homeland Security; the Directors of
the Mint, BEP, and Secret Service; and other interested parties. We
will also make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at http:/
/www.gao.gov.
Major contributors to this report were Bob Homan, John Baldwin, Paul
Desaulniers, and John Cooney. If you have any questions, please contact
me on (202) 512-2834 or at ungarb@gao.gov.
Bernard L. Ungar
Director, Physical Infrastructure Issues:
Signed by Bernard L. Ungar:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To review how security is provided at the U.S. Mint and the Bureau of
Engraving and Printing (BEP) and how it compares with other
organizations, we interviewed Mint and BEP officials about their
security practices, responsibilities, and security threats. We
collected information about their police forces, including job
classifications, number of police, application requirements, starting
salaries, retirement benefits, attrition rates, training, and statutory
authorities. In addition, we discussed with Mint and BEP officials the
feasibility of consolidating certain security-related functions and
collected information on the number of personnel who work on security
at the two agencies, but who are not police officers.
We also asked the 12 coin and currency producing organizations in the
six other G7 nations (Canada, France, Germany, Italy, Japan, and the
United Kingdom); the Federal Reserve; and businesses that handle a
large amount of cash, such as banks and casinos, about who provides
their security, why, and whether they had experienced thefts of items
in value of more than $1,000 in each incident during the last 10 years.
We chose to contact the coin and currency producing organizations in
the other G7 nations because they were in other major industrialized,
democratic countries. We received responses from 8 of the 12 foreign
coin and currency producing organizations that we contacted regarding
our requests for information. The coin and currency producing
organizations in 1 country did not respond to our requests for
information. The banks and casinos that we contacted were selected by
the American Bankers Association and the American Gaming Association,
which represent the banking and casino industries. However, the
selected banks and casinos do not represent the views of the two
industries.
To determine what thefts have occurred at the Mint and BEP and whether
steps have been taken to address them, we asked the agencies to provide
information about thefts that have occurred at their facilities during
the last 10 years.[Footnote 21] We also reviewed relevant Department of
the Treasury Office of Inspector General reports, including
investigative reports pertaining to certain incidents of theft. We then
discussed those incidents with the Mint and BEP security officials, and
we also discussed with the officials the steps that were taken to
prevent thefts from recurring and whether the thefts were caused by
deficiencies in the police forces.
Regarding Mint security, we also reviewed a 2000 Sandia National
Laboratories report, which contained 42 recommendations to improve
security, to determine whether its recommendations pertaining to the
Mint's Philadelphia, Pennsylvania, and Ft. Knox, Kentucky, facilities
had been implemented. We visited those facilities because more
recommendations pertained to those facilities compared with other Mint
facilities. In addition, we contacted two coin dealers about the
circulation of "error coins." These dealers were selected because they
specialized in the buying and selling of error coins.
Regarding BEP security, we reviewed a 1994 Secret Service report, a
1995 KPMG Peat Marwick report, and a 2000 Kelly, Anderson & Associates
report regarding recommendations to improve security at BEP facilities.
We determined whether the 19 United States Secret Service
recommendations and the 7 KPMG recommendations that Kelly Anderson
indicated had not been implemented in 2000 were implemented. We also
determined whether a random sample of 20 high-risk recommendations
contained in the Secret Service and KPMG reports, which Kelly Anderson
reported had been implemented, were actually implemented. We visited
BEP's Washington, D.C., facility to check whether recommendations had
been implemented because the recommendations in the Secret Service and
KPMG reports pertained to that facility.
To determine the potential benefits and costs of having the Secret
Service provide Mint and BEP security, we asked the Mint, BEP, Secret
Service, and Treasury Department for their views on which agency would
be most effective regarding various security-relations functions. We
also compared the information that we collected regarding the Secret
Service's Uniformed Division with the data collected regarding the
missions, security forces, training costs, retirement benefits, and
security incidents at the Mint and BEP.
Regarding retirement costs, we asked the Office of Personnel Management
(OPM) to estimate how much more it would cost the government if the
Mint and BEP police were given the same law enforcement retirement
benefits that the Uniformed Division officers receive. To calculate the
estimate, OPM asked us to provide data on the number of police at the
Mint and BEP who are in the Civil Service Retirement System and the
Federal Employees Retirement System and their average salaries. We also
asked the Mint, BEP, and Secret Service to provide their views on the
advantages and disadvantages of transferring the Mint and BEP police
forces to a second tier of the Uniformed Division. The scope of our
work did not include examining the advantages and disadvantages of
contracting out security services for the Mint and BEP.
We did our work in Washington, D.C; Philadelphia; and Ft. Knox in
accordance with generally accepted government auditing standards and
investigative standards established by the President's Council on
Integrity and Efficiency from July 2002 through June 2003.
[End of section]
Appendix II: Data Concerning the U.S. Mint and the Bureau of Engraving
and Printing Police Forces:
Protected facilities; Mint police: Mint facilities in Denver, Colorado;
Ft. Knox, Kentucky; Philadelphia, Pennsylvania; San Francisco,
California; West Point, New York; and Washington, D.C; BEP police: BEP
facilities in Ft. Worth, Texas; and Washington, D.C.
Federal job classification for police; Mint police: Police Officer (job
classification 0083); BEP police: Police Officer (job classification
0083).
Number of police as of March 2003; Mint police: 381; BEP police: 209.
Major job application requirements; Mint police: U.S. citizen; Pass a
medical examination, drug screening, and background investigation;
One year of specialized experience as a police officer or comparable
experience (may be substituted with a 4-year college degree in Police
Science or comparable field); Obtain a secret security clearance; BEP
police: U.S. citizen; Age 21; Pass the National Police Officer
Selection Test; Pass a medical examination, drug screening, and
background investigation; One year of specialized experience as a
police officer or comparable experience (may be substituted with a 4-
year college degree in Police Science or comparable field).
2003 starting salaries for police stationed in Washington, D.C; Mint
police: $38,852; BEP police: $38,852.
Fiscal year 2002 police attrition rates; Mint police: 14 percent[A];
BEP police: 17 percent[A].
Fiscal year 2001 police attrition rates; Mint police: 7 percent; BEP
police: 7 percent.
Mission training requirements; Mint police: 10 weeks of basic training
at the Federal Law Enforcement Training Center (FLETC); 5 weeks of
field training after FLETC; 48 hours of annual training; In the 4[TH]
year of employment, 2 weeks of advanced training; BEP police: 2 weeks
of training before FLETC; 10 weeks of basic training at FLETC; 8 weeks
of field training after FLETC; 2 weeks of annual training.
Sources: U.S. Mint and Bureau of Engraving and Printing.
[A] This figure represents the attrition rate for police officers
agencywide. Our June 2003 report on police recruitment and retention
issues at 13 federal agencies, including the Mint and BEP, analyzed
where Mint and BEP police who were stationed in Washington, D.C., and
left their jobs in 2002, found other employment. (U.S. General
Accounting Office, Federal Uniformed Police: Selected Data on Pay,
Recruitment, and Retention at 13 Police Forces in the Washington, D.C.,
Metropolitan Area, GAO-03-658 (Washington, D.C.: June 13, 2003).)
According to that report, of the 21 Mint police who were stationed in
Washington, D.C., and left their jobs in 2002, 18 went to the
Transportation Security Administration (TSA) and 3 went to other
federal law enforcement agencies. The report also indicated that of the
32 BEP police who were stationed in Washington, D.C., and left their
jobs in 2002, 12 went to TSA, 12 went to other federal law enforcement
agencies, 3 went to state and local law enforcement agencies, and no
information was available regarding the other 5 officers.
[End of table]
[End of section]
Appendix III: Data Regarding the United States Secret Service's
Uniformed Division:
Protected facilities[A]; Secret Service's Uniformed Division: The White
House complex, the Treasury Department headquarters building and annex,
the Vice President's residence, and foreign diplomatic missions.
Job classification; Secret Service's Uniformed Division: According to
Secret Service officials, pursuant to 5 U.S.C. § 5102 (c), the
Uniformed Division is exempt from the federal job classification system
and, therefore, its officers do not have the 0083 job classification
that applies to the Mint and BEP police.
Number of police as of February 2003; Secret Service's Uniformed
Division: 1,106.
Major job application requirements; Secret Service's Uniformed
Division: U.S. citizen; Ages 21 to 36 at time of appointment; Pass
the National Police Officer Selection Test; Pass a medical
examination, drug screening, and background investigation; Possess a
high school diploma or equivalent; Qualify for top-secret security
clearance; Must submit to a polygraph test.
2003 starting salaries for police stationed in Washington, D.C; Secret
Service's Uniformed Division: $40,345.
Fiscal year 2002 police attrition rates; Secret Service's Uniformed
Division: 23 percent[B].
Fiscal year 2001 police attrition rates; Secret Service's Uniformed
Division: 12 percent.
Mission training requirements; Secret Service's Uniformed Division: 10
weeks of basic training at FLETC; 11 weeks of specialized training
after FLETC; 22 hours of annual training[C].
Source: United States Secret Service.
[A] The Secret Service protects the people who occupy these facilities.
[B] According to our June 2003 report on recruitment and retention
issues regarding 13 police forces in the Washington, D.C.,
metropolitan area, including the Secret Service, of the 234 Uniformed
Division officers who left their jobs in fiscal year 2002, the
greatest number (148 officers) went to work at the newly created TSA.
[C] This training reflects firearms requalification requirements only.
Secret Service officials said that Uniformed Division officers receive
additional in-service training, depending on the group they are
assigned to, such as canine or counter-sniper.
[End of table]
[End of section]
Appendix IV: Comments from the U.S. Mint:
DEPARTMENT OF THE TREASURY UNITED STATES MINT WASHINGTON, D.C. 20220:
DIRECTOR OF THE MINT:
June 30, 2003:
MEMORANDUM FOR BERNARD L. UNGAR, DIRECTOR PHYSICAL INFRASTRUCTURE
ISSUES U.S. GENERAL ACCOUNTING OFFICE:
FROM: Henrietta Holsman
Director:
United States Mint:
SUBJECT: Draft Audit Report "Coin and Currency Production: Issues
Concerning Who Should Provide Security (GAO-03-696)":
The United States Mint has reviewed the draft audit report entitled,
"Coin and Currency Production: Issues Concerning Who Should Provide
Security," and concurs with the findings and conclusions as they apply
to the United States Mint.
[End of section]
(543034):
FOOTNOTES
[1] Test currency is produced for design, equipment, and/or material
testing or experimental purposes to evaluate counterfeit deterrent
features or for other purposes. In this case, the currency was
spendable and looked like real money.
[2] The Mint did not have data regarding thefts that occurred from 1993
through 1997; therefore, it provided data on thefts that occurred from
1998 through 2002.
[3] Public Law 107-296, 116 Stat. 2135, 2178 (2002).
[4] Public Law 107-296, 116 Stat. 2135, 2310-2311 (2002).
[5] Note to 31 U.S.C. § 5141.
[6] Background investigations are conducted on Mint and BEP job
applicants and contractors, and periodic investigation updates are
conducted on current employees. The Mint's background investigations
are conducted by the Internal Revenue Service's National Background
Investigation Center and the Office of Personnel Management (OPM). In
fiscal year 2002, BEP conducted 1,247 background investigations and
referred 191 investigations to OPM. BEP referred these investigations
to OPM because the applicants had lived and worked in multiple states.
According to BEP, it was more cost-effective for OPM to conduct those
investigations because OPM has several offices located throughout the
United States.
[7] After the September 11, 2001, terrorist attacks, the Board of
Governors temporarily supplemented the security at its Washington,
D.C., facilities with an armed contract security service, but the
contact security service is now being phased out.
[8] Public Law 107-56, 115 Stat. 272, 333 (2001), amended 12 U.S.C. §
248, by adding subsection (q) on uniform protection authority of
Federal Reserve facilities.
[9] The Federal Reserve indicated that the theft of some of the missing
money is still under investigation and that it expects to recover more
of the stolen cash.
[10] The Mint did not record the value of all items that were stolen
during this period. Therefore, the total value of the items stolen is
incomplete. The Mint also reported the total market value, rather than
the face value, of the 400 to 500 coins that were stolen by an employee
from 1998 through 2000. The head of a company that specializes in the
buying and selling of error coins told us that the value of error coins
depends on many factors, such as the type of error and the rarity of
the coins. He said, for example, that a circulating commemorative state
quarter that is 50 percent off-center could be worth between $150 to
$200, depending on which state is on the coin and how many similar
coins are available. However, other rare error coins can be worth tens
of thousands of dollars apiece. Mint officials said that although error
coins are valuable to coin collectors, they are considered to be scrap
by the Mint with negligible cost.
[11] Because the Mint did not maintain records regarding the value of
some of the coins involved in these incidents, the actual value of
these items is higher than $36.
[12] This amount represents the value of penny blanks stolen during two
of the three incidents. The Mint did not report the value of the penny
blanks stolen in the third incident.
[13] According to the Mint's Police Chief, following the September 11,
2001, terrorist attacks, information regarding the Mint's Philadelphia
facility was found in Afghanistan indicating that it was a potential
terrorist target.
[14] Some cases involved currency for which the production process was
not yet completed. One incident accounted for over $1.6 million of the
$1.8 million total.
[15] This employee was caught taking $5,600 worth of stamps from a BEP
production facility. Another $15,360 worth of stamps was found in the
employee's BEP locker and in the trunk of his automobile.
[16] Probable cause has been defined as reasonable grounds to suspect
that a person has committed or is committing a crime.
[17] Kelly Anderson, which is based in Alexandria, Virginia, provides
consulting services to federal government agencies under a contract
with the General Services Administration for management, organization,
and business improvement services.
[18] The number of incidents that the Secret Service reported for 2002
was substantially lower than in previous years from 1993 through 2001.
According to the Secret Service, the decrease was likely the result of
the suspension of public tours at the White House after the September
11, 2001, terrorist attacks.
[19] Under the Federal Employees Retirement System (FERS), officers
receiving federal law enforcement retirement benefits receive 1.7
percent of their high-3 years of employment, multiplied by the first 20
years of service, and 1 percent multiplied by each year of service
greater than 20 years.
[20] To retire with full standard federal retirement benefits,
employees generally must be at least between ages 55 and 57 with 30
years of service. The age at which they are eligible to retire with
unreduced retirement benefits depends on the year of their birth and
the specific retirement plan under which they are covered (CSRS or
FERS). Employees who are age 60 can retire with 20 years of service;
employees who are age 62 can retire with 5 years of service.
[21] The Mint indicated that it did not have information regarding
security incidents going back 10 years. However, the Mint did provide
information regarding security incidents that occurred during the past
5 years.
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