Outsourced passports netting govt. profits, risking national security

This is the first in a three-part series on the outsourcing of passports.
The United States has outsourced the manufacturing of its electronic passports to overseas companies — including one in Thailand that was victimized by Chinese espionage — raising concerns that cost savings are being put ahead of national security, an investigation by The Washington Times has found.

The Government Printing Office’s decision to export the work has proved lucrative, allowing the agency to book more than $100 million in recent profits by charging the State Department more money for blank passports than it actually costs to make them, according to interviews with federal officials and documents obtained by The Times.

The profits have raised questions both inside the agency and in Congress because the law that created GPO as the federal government’s official printer explicitly requires the agency to break even by charging only enough to recover its costs.

Lawmakers said they were alarmed by The Times’ findings and plan to investigate why U.S. companies weren’t used to produce the state-of-the-art passports, one of the crown jewels of American border security.

“I am not only troubled that there may be serious security concerns with the new passport production system, but also that GPO officials may have been profiting from producing them,” said Rep. John D. Dingell, the Michigan Democrat who chairs the House Energy and Commerce Committee.

Officials at GPO, the Homeland Security Department and the State Department played down such concerns, saying they are confident that regular audits and other protections already in place will keep terrorists and foreign spies from stealing or copying the sensitive components to make fake passports.

“Aside from the fact that we have fully vetted and qualified vendors, we also note that the materials are moved via a secure transportation means, including armored vehicles,” GPO spokesman Gary Somerset said.

But GPO Inspector General J. Anthony Ogden, the agency’s internal watchdog, doesn’t share that confidence. He warned in an internal Oct. 12 report that there are “significant deficiencies with the manufacturing of blank passports, security of components, and the internal controls for the process.”

The inspector general’s report said GPO claimed it could not improve its security because of “monetary constraints.” But the inspector general recently told congressional investigators he was unaware that the agency had booked tens of millions of dollars in profits through passport sales that could have been used to improve security, congressional aides told The Times.

Decision to outsource

GPO is an agency little-known to most Americans, created by Congress almost two centuries ago as a virtual monopoly to print nearly all of the government’s documents, from federal agency reports to the president’s massive budget books that outline every penny of annual federal spending. Since 1926, it also has been charged with the job of printing the passports used by Americans to enter and leave the country.

When the government moved a few years ago to a new electronic passport designed to foil counterfeiting, GPO led the work of contracting with vendors to install the technology.

Each new e-passport contains a small computer chip inside the back cover that contains the passport number along with the photo and other personal data of the holder. The data is secured and is transmitted through a tiny wire antenna when it is scanned electronically at border entry points and compared to the actual traveler carrying it.

According to interviews and documents, GPO managers rejected limiting the contracts to U.S.-made computer chip makers and instead sought suppliers from several countries, including Israel, Germany and the Netherlands.

Mr. Somerset, the GPO spokesman, said foreign suppliers were picked because “no domestic company produced those parts” when the e-passport production began a few years ago.

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