Coin and Currency Production: Issues Concerning Who Should	 
Provide Security (18-JUL-03, GAO-03-696).			 
                                                                 
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. 	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-696 					        
    ACCNO:   A07602						        
  TITLE:     Coin and Currency Production: Issues Concerning Who      
Should Provide Security 					 
     DATE:   07/18/2003 
  SUBJECT:   Currency and coinage				 
	     Currency losses					 
	     Facility security					 

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GAO-03-696

                                       A

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

Contents Letter 1

Results in Brief 2 Background 4 How Security Is Provided at the Mint, BEP,
and Selected Other

Organizations 5 Thefts at the Mint and BEP and Steps They Have Taken to
Prevent

Such Incidents 9 Potential Benefits and Costs of Having the Secret Service
Provide

Mint and BEP Security 15 Agency Comments 21

Appendixes

Appendix I: Scope and Methodology 22

Appendix II: Data Concerning the U. S. Mint and the Bureau of Engraving
and Printing Police Forces 25

Appendix III: Data Regarding the United States Secret Service*s Uniformed
Division 26

Appendix IV: Comments from the U. S. Mint 27

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

This is a work of the U. S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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copyright holder may be necessary if you wish to reproduce this material
separately.

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 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

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.

through 2002 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

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.

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. S: 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. S: 1315 by transferring responsibility
for this policing authority to the Secretary of the Department of Homeland

Security (DHS), 3 the savings provisions in the act state that the
existing delegations will continue to apply. 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. 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. S: 202 and 18
U. S. C. S: 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 The Mint and BEP use their own police forces to protect
their facilities and

Provided at the Mint, the money they produce. Eight of the 12 coin and
currency organizations in

the other G7 nations responded to our requests for information. Four BEP,
and Selected

organizations reported that they only used their own security forces; 2
Other Organizations

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.

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. S: 5141.

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. 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 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.

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 We sent questionnaires to both the coin and
currency producing

Money Producing Facilities organizations in the six other G7 nations
(Canada, France, Germany, Italy, in Other Countries

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 We contacted four banks and two casinos regarding
who provides their

Businesses that Handle security and why because, like the Mint and BEP,
these entities also handle Large Amounts of Cash

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 nation*s central
bank, employs its own

the Federal Reserve System police force. 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. 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. 9

Thefts at the Mint and We asked the Mint and BEP to provide information
regarding thefts that

BEP and Steps They occurred over the last decade. We reviewed these
incidents with Mint and

BEP security officials in terms of what happened, why, and how they Have
Taken to Prevent

occurred, and what steps have been taken to prevent thefts from recurring.
Such Incidents 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.

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. S:
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.

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. 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. 11 Outside of Mint facilities, about $10,505 in government
property was

reported stolen, involving 46 incidents, including the following: 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.

 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; 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

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.

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. 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

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.

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. 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; 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

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.

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, 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

16 Probable cause has been defined as reasonable grounds to suspect that a
person has committed or is committing a crime.

& Associates 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

According to the Secret Service, if it were given the responsibility of
Costs of Having the protecting the Mint and BEP, those agencies could
benefit from the Secret Service*s expertise in protection and criminal
investigations. However, Secret Service Provide unlike the Secret
Service*s Uniformed Division, the Mint and BEP police

Mint and BEP Security 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.

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.

Secret Service*s Uniformed The Secret Service*s Uniformed Division
consists of police officers whose

Division 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. 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

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.

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 If the Secret Service protected the Mint and
BEP, the government could

with Having the Secret incur additional costs because the Secret Service
requires more initial

Service Protect the Mint and training for its officers than the Mint and
BEP police, Uniformed Division BEP

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. 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

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.

Retirement System (CSRS) or after 30 years of service under the Federal
Employees Retirement System (FERS). 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

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.

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. S: 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

Appendi Appendi xes x 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 securityrelated 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. 1 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.

1 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.

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.

Data Concerning the U. S. Mint and the Bureau

Appendi x II

of Engraving and Printing Police Forces Mint police BEP police

Protected facilities Mint facilities in Denver, Colorado; Ft. Knox, BEP
facilities in Ft. Worth, Texas; and Kentucky; Philadelphia, Pennsylvania;
San

Washington, D. C. Francisco, California; West Point, New York; and
Washington, D. C. Federal job classification for police Police Officer
(job classification 0083) Police Officer (job classification 0083)

Number of police as of March 2003 381 209 Major job application
requirements U. S. citizen

U. S. citizen Pass a medical examination, drug screening,

Age 21 and background investigation

Pass the National Police Officer Selection Test One year of specialized
experience as a police officer or comparable experience (may be Pass a
medical examination, drug screening,

substituted with a 4- year college degree in and background investigation

Police Science or comparable field) One year of specialized experience as
a police Obtain a secret security clearance officer or comparable
experience (may be substituted with a 4- year college degree in

Police Science or comparable field) 2003 starting salaries for police $38,
852 $38, 852 stationed in Washington, D. C. Fiscal year 2002 police
attrition rates 14 percent a 17 percent a

Fiscal year 2001 police attrition rates 7 percent 7 percent Mission
training requirements 10 weeks of basic training at the Federal Law 2
weeks of training before FLETC Enforcement Training Center (FLETC)

10 weeks of basic training at FLETC 5 weeks of field training after FLETC

8 weeks of field training after FLETC 48 hours of annual training

2 weeks of annual training In the 4 th year of employment, 2 weeks of
advanced 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.

Data Regarding the United States Secret

Appendi x III

Service*s Uniformed Division Secret Service*s Uniformed Division

Protected facilities a The White House complex, the Treasury Department
headquarters building and annex, the Vice President*s residence, and
foreign diplomatic missions Job classification According to Secret Service
officials, pursuant to 5 U. S. C. S: 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 1, 106 Major job application
requirements 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

$40,345 Washington, D. C. Fiscal year 2002 police attrition rates 23
percent b

Fiscal year 2001 police attrition rates 12 percent Mission training
requirements 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.

Appendi x IV

Comments from the U. S. Mint (543034)

a

GAO United States General Accounting Office

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. 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. 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. 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 July
2003

COIN AND CURRENCY PRODUCTION

Issues Concerning Who Should Provide Security

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Appendix I

Appendix I Scope and Methodology

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Appendix I Scope and Methodology

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Appendix II

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Appendix III

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Appendix IV

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