- The Washington Times - Wednesday, September 24, 2008

EXCLUSIVE:

The State Department for overcharges from the sale of millions of blank passports, according to GPO officials and internal government documents.

Several checks totaling more than $51,169,837 were delivered to the department Friday by armed couriers from the federal agency’s headquarters on North Capitol Street, said the officials, some of whom spoke on the condition of anonymity.

The repayment coincided with a six-month investigation by The Washington Times, GPO managers apparently sought to conceal the excessive profits generated by the passport sales by sharply raising overhead costs from 2007 to 2008, an activity described as “questionable” in the draft report.

The investigation began in April after the disclosure of the excessive profits and other questionable activities at the GPO that were first made public by The Times.

According to the GPO officials and internal documents, the money returned to the State Department includes $9.5 million that exceeded the amount authorized by Congress for building a backup passport production facility in John C. Stennis Space Center. However, the agency spent only $31.5 million.

The GPO officials estimated that the GPO amassed as much as $180 million in profits by charging an additional $1.83 per passport on its sales to the State Department. Each passport contains an electronic chip designed to make it more secure.

Secretary of State Condoleezza Rice said in March that her department had launched an investigation into the overcharges. She told reporters and editors of The Times, “I hope GPO is giving us the best deal they can.”

State Department spokesman Sean McCormack declined to comment on the return of the overcharges. A department official, who spoke on the condition that he not be named, described the transfer as “a recovery,” a description similar to that used by the GPO.

The official said the refund will be used to fund new passports but would not say whether the price of passports, currently about $100, would be lowered.

The private accounting firm KPMG also is investigating GPO accounting practices, the GPO officials said. The investigation was described as a Statement on Auditing Standards No. 99: Consideration of Fraud in a Financial Statement, or SAS 99.

A KPMG spokesman declined to comment on the probe.

Gary Somerset, a GPO spokesman, said in a statement that the $51 million was returned as the result of an “over-recovery” of costs “because the actual quantity of passports produced exceeded the original quantity used to determine the price.”

The GPO, the federal government’s monopoly printing agency, began accumulating large profits in recent years after decades of following a federal law that limited the agency to operating on a break-even basis.

Mr. Somerset said auditors in the past have given the GPO “an unqualified opinion about the condition of our books” and that “GPO expects that again this year.”

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