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Earlier this year, documents and GPO officials disclosed that the printing agency made about $90 million in profits for fiscal 2007 and another $90 million between January and June, far beyond the $41 million authorized by Congress.

The draft GAO inspector general report states that the GPO produced 18.6 million passports and sold them for $14.80 per blank booklet to the State Department for $275 million, “including $71 million in net income.”

“Recently, Congress and the news media have questioned GPO regarding the legality and reasonableness of the net income,” the report stated.

Major issues identified by the IG included a tenfold rise in indirect overhead costs for passports, which increased from 5.6 percent, or $4 million in fiscal 2007, to 52 percent, or $40 million, in fiscal 2008.

The excessive overhead had the effect of reducing GPO’s ostensible profit on passport sales from $111.6 million to $71.5 million, the report stated.

“Some suspect that this unreasonable overhead expense reallocation was an act to conceal passport profits,” said one GPO official, who spoke on the condition of anonymity. “If a commercial contractor diverted funds of this magnitude from the government, a criminal investigation would surely be under way.”

Other problems identified in the report included a lack of a formal management policy at GPO on costing, overstated labor costs and misstated overtime costs.

GPO financial managers included in indirect overhead costs the funding of a major GPO digitalization program. The report noted that “by including the costs of this project in the indirect overhead cost pool, GPO is funding over half of the cost of this project through passport sales” to the State Department.

However, the manager for the project told the IG that he “could not confirm that over half the project will benefit passport production, stating that the project had nothing to do with passports.”

The report said GPO’s chief financial officer “should document an explanation of the change in indirect overhead allocation methodology.”

Steve Shedd, the GPO chief financial officer, could not be reached for comment. Mr. Somerset, the GPO spokesman, dismissed questions about Mr. Shedd’s accounting work as “unfounded accusations.”

Earlier this year, Public Printer Robert Tapella stated in written questions and answers submitted to the House Committee on Energy and Commerce that the GPO did not make excessive profits on the sales of passports to the State Department.

He said the money made from passports was “currently recognized as net income” that “is being dedicated to ongoing and/or anticipated future capital investments to support passport production.”

The large profits at GPO coincided with increased travel by GPO managers, bonuses and excessive spending on executive perks, such as $10,000 spent on official photographs for Mr. Tapella.

Other spending included travel by senior GPO officials to exotic foreign locations and numerous domestic Germany, several months ago that cost more than $133,000.