BUREAU OF 

ENGRAVING AND 

PRINTING

Options for and Costs 

of a Future Currency 

Production Facility

Report to the Chairman, Subcommittee 

on Capital Markets, Securities, and 

Investment, Committee on Financial 

Services, House of Representatives

April 2018

GAO-18-338

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-338, a report to the 

Chairman, Subcommittee on Capital Markets, 

Securities, and Investment, Committee on 

Financial Services, House of Representatives

April 2018

BUREAU OF ENGRAVING AND PRINTING

Options for and Costs of a Future Currency 

Production Facility

What GAO Found

The Bureau of Engraving and Printing’s (BEP) studies and research determined 

that a new production facility would be less expensive and better address BEP’s 

need for secure, efficient, and flexible currency production than a renovation of 

its Washington, D.C. facility. According to 2017 cost estimates, BEP’s preferred 

option—a new production facility in the Washington, D.C., area and some 

renovated administrative space in its current D.C. facility—would cost 

approximately $1.4 billion, while a renovation of its current facility for both 

production and administrative functions would cost approximately $2.0 billion. A

new facility similar to BEP’s Texas facility could have a secure perimeter that 

meets federal building security standards. Such a perimeter is not possible with 

the current facility. A new facility could also house production on a single 

production floor to allow for a more efficient production process.

Aerial View of the Bureau of Engraving and Printing’s Washington, D.C. and Texas Facilities

BEP generally followed leading capital-planning practices, and its 2017 cost 

estimate of a new production facility partially met the characteristics of a reliable 

cost estimate. BEP’s capital planning followed leading practices, for example, by 

including a needs assessment, a link to BEP’s strategic plan, and a long-term 

capital plan. BEP’s cost estimate partially followed leading practices, for 

example, by including most life-cycle cost components and documentation of the 

data used for the estimate. However, it did not include sufficient sensitivity 

analyses, which identify a range of costs-based on varying assumptions. BEP 

officials stated that they plan to follow the updated GSA guidance that includes

GAO’s cost-estimating leading practices when updating this early stage estimate.

The ability to sell or repurpose any part of the current D.C. facility could affect the

total federal costs of BEP’s actions. According to officials from the Department of 

the Treasury (Treasury) and the General Services Administration (GSA), there 

could be savings if Treasury could consolidate staff or operations into the 

vacated facility. There could also be savings if the unneeded facility could be 

sold to a private buyer. However there would be costs to prepare the facility for 

use by other entities or if the unneeded facility does not sell. Agency officials said 

that it is too early to determine specific costs and savings.

View GAO-18-338. For more information, 

contact Lori Rectanus at (202) 512-2834 or 

rectanusl@gao.gov.

Why GAO Did This Study

BEP, within Treasury, designs and 

produces U.S. currency notes at BEP’s

facilities in Washington, D.C., and Fort 

Worth, Texas. The Federal Reserve 

pays for BEP’s operational expenses,

including currency production. BEP is

requesting legal authority to purchase 

land and construct a new production 

facility in the D.C. area. BEP officials 

told GAO that, if it does not receive the 

necessary legal authority for a new 

production facility, it will renovate the 

D.C. facility.

GAO was asked to review BEP’s 

facility planning process. This report: 

(1) describes the results of facility 

studies that BEP has funded and 

factors that led BEP to propose a new 

production facility, (2) examines the 

extent to which BEP’s actions align 

with leading capital planning and cost 

estimating practices, and (3) describes 

other factors that could affect total 

federal costs of BEP’s actions.

GAO analyzed BEP documents and 

data from 2010-2017 on currency note 

production, visited both BEP 

production facilities, assessed BEP’s 

actions against leading capital planning 

and cost estimating practices, and 

interviewed officials from BEP, GSA, 

the Federal Reserve, and Treasury.

GAO provided the draft report to BEP, 

GSA, the Federal Reserve, and 

Treasury for review. BEP coordinated 

with Treasury in its comments. In the 

comments, reproduced in Appendix I, 

BEP emphasized the factors that led 

BEP to determine that a new facility is 

the preferred alternative. BEP and the 

Federal Reserve also provided 

technical comments, which we 

incorporated as appropriate. GSA did 

not provide comments.
Page i GAO-18-338 Currency Production Facility

Letter 1

Background 4

BEP’s Proposal for a New Production Facility Considered Project 

Costs and Feasibility, Security, Efficiency, Safety, and Future 

Flexibility 7

BEP Generally Followed Leading Capital-Planning Practices, and 

Its 2017 Cost Estimate Partially Met the Characteristics of a 

Reliable Cost Estimate 15

Ability to Sell or Repurpose Potentially Vacant Space Could Affect 

the Total Cost to the Federal Government 22

Agency Comments 27

Appendix I Comments from the Department of the Treasury 29

Appendix II GAO Contact and Staff Acknowledgments 31

Tables

Table 1: Studies Related to a New Production Facility 

Commissioned by the Bureau of Engraving and Printing 

(BEP) Since 2010 8

Table 2: Current and Proposed Use of Bureau of Engraving and 

Printing’s (BEP) Buildings in the D.C. Area under the 

Hybrid Alternative 9

Table 3: Fiscal Year 2016 Production Reported by the Bureau of 

Engraving and Printing (BEP) at Washington, D.C., and 

Fort Worth, Texas, Facilities 12

Table 4: GAO’s Assessment of the Bureau of Engraving and 

Printing’s Adherence to Leading Capital-Planning 

Practices for Its Proposed New Currency Production 

Facility 16

Table 5: Alternative Methods BEP Considered to Fund and Obtain 

Land and a Building for a New Production Facility 18

Table 6: GAO’S Assessment of the Extent to Which the Bureau of 

Engraving and Printing’s (BEP) 2017 Cost Estimate Meets 

the Characteristics of a High-Quality, Reliable Cost 

Estimate. 19

Contents
Page ii GAO-18-338 Currency Production Facility

Figures

Figure 1: Aerial Views of the Bureau of Engraving and Printing’s 

Washington, D.C., and Fort Worth, Texas, Facilities 6

Figure 2: Potential Disposition and Funding of BEP’s Washington, 

D.C., Facility and Related Potential Costs or Savings 23

Abbreviations

BEP Bureau of Engraving and Printing 

D.C. Washington, D.C.

GSA General Services Administration 

ISC Interagency Security Committee

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-18-338 Currency Production Facility

441 G St. N.W.

Washington, DC 20548

April 5, 2018

The Honorable Bill Huizenga

Chairman

Subcommittee on Capital Markets, Securities, and Investment

Committee on Financial Services

House of Representatives

Dear Mr. Chairman:

For over 150 years, the Bureau of Engraving and Printing (BEP) within 

the U.S. Department of the Treasury (Treasury) has been responsible for 

designing and producing U.S. currency notes. BEP prints the notes for 

the Federal Reserve System (Federal Reserve), which is BEP’s primary 

client.1 BEP reported that in fiscal year 2018, it plans to produce 7.4 

billion notes worth about $233 billion at its facilities in Washington, D.C., 

and Fort Worth, Texas. The D.C. facility is over 100 years old, and 

currency production primarily takes place on different floors in one of its 

two multi-wing, multi-level buildings. The Fort Worth facility is less than 30 

years old and includes a large, one-level open space for producing 

currency.

BEP has explored renovating the D.C. facility or replacing it with a new 

facility in the D.C. area to bring its currency production up to 21st -century 

production standards. BEP has proposed building a new currency 

production facility in the D.C. area and repurposing one of its current D.C. 

buildings for administrative functions. According to Treasury officials, 

while BEP has the legal authority to use its revolving fund to renovate an 

existing facility, it does not have legal authority to purchase land and 

construct a new facility, nor the authority to use the revolving fund to pay 

for such a project. As a result, BEP is seeking the necessary legal 

authority to purchase land and construct a new building in the D.C. area, 

as part of the fiscal year 2018 President’s budget proposal. BEP officials 

have stated that if BEP does not receive this legal authority and funding, it 

will begin a renovation of the current D.C. facility. According to BEP, it 

would be designed to address the facility’s deficiencies and to 

accommodate new, larger printing equipment that BEP anticipates 

 1

According to BEP officials, almost 100 percent of BEP’s production consists of producing 

bank notes for the Federal Reserve. On occasion, BEP receives orders from other 

agencies to print certificates and other documents.

Letter
Page 2 GAO-18-338 Currency Production Facility

needing over the next few years for security features being developed for 

new currency notes.

You asked us to review BEP’s proposal to build a new production facility 

in the Washington, D.C., area. This report:

• describes the results of the facility studies that BEP has funded and 

factors that led BEP to propose a new production building;

• examines the extent to which BEP’s actions align with leading capitalplanning and cost-estimating practices; and

• describes other factors that could affect total federal costs if BEP were 

to construct a new production facility or renovate its existing D.C. 

facility.

To describe the results of the facility studies that BEP has funded and the 

factors BEP considered in proposing a new currency production facility, 

we reviewed studies and cost estimates BEP undertook between 2010 

and 2017, its strategic plans, and pertinent BEP operations and 

production data. Specifically, we reviewed workers’ compensation claims 

and manufacturing costs from fiscal years 2013 through 2016. We also 

reviewed employee staffing levels as of September 2017. While we did 

not independently assess the validity of these data, we reviewed the data 

for outliers and obvious errors. We found the data to be sufficiently 

reliable for our purposes. We conducted a literature review of research on 

currency demand. We reviewed the President’s 2017 and 2018 budget 

proposals as well as relevant statutes and regulations. We visited BEP’s 

facilities in Washington, D.C., and Fort Worth, Texas, to examine the 

production process at both facilities. We interviewed officials from BEP, 

the Federal Reserve, and Treasury. We also interviewed officials from the 

General Services Administration (GSA), which is responsible for helping 

federal agencies acquire and dispose of office space, among other things.

To determine the extent to which BEP’s actions aligned with leading 

capital-planning and cost-estimating practices, we first identified leading 

capital-planning and cost-estimating practices from a variety of federal 

sources. In particular, we reviewed the leading capital investment 

decision-making practices identified by GAO and OMB in their respective 
Page 3 GAO-18-338 Currency Production Facility

guides,2 as well as leading cost-estimating practices identified in GAO’s 

Cost Estimating and Assessment Guide.3 We focused on the capitalplanning processes that would be most applicable to BEP, which has 

limited real property. The applicable processes include:

• conducting an assessment of current and future needs;

• evaluating alternatives to determine how to best bridge performance 

gaps;

• strategically linking capital investments to a strategic-planning 

process; and

• documenting the agency’s goals and objectives, among other things, 

in a long-term capital plan.4

We compared these leading practices against actions BEP took since 

2010 that led BEP to conclude that the agency would be best served by a 

new production facility. Specifically, we reviewed BEP’s 2010 and 2013 

feasibility studies, BEP and Treasury strategic and long-term capital 

plans, and other relevant documents. Regarding cost estimating, we 

focused on four broad characteristics of high quality, reliable cost 

estimates identified in the Cost Estimating and Assessment Guide. These 

characteristics include that the estimates are comprehensive, welldocumented, accurate, and credible. We compared BEP’s 2017 estimate 

for the cost of BEP’s proposal for a new facility to these practices 

because it was BEP’s most recent cost estimate for constructing a new 

facility. As part of our work, we reviewed the cost information that BEP 

used to develop its 2017 cost estimate and interviewed senior BEP 

officials on the estimates.

To describe other factors that could affect the overall cost to the federal 

government if BEP were to construct a new production facility or renovate 

 2

GAO, Executive Guide: Leading Practices in Capital Decision-Making. GAO/AIMD-99-32 

(Washington, D.C.: December 1998); and OMB, Capital Programming Guide, Supplement 

to Office of Management and Budget Circular A-11: Planning, Budgeting, and Acquisition 

of Capital Assets (2017).

3

GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs. GAO-09-2SP (Washington, D.C.: March 2009).

4

We found that not all leading capital-planning practices were applicable to BEP, such as 

a review and approval of a framework with established criteria for selecting capital 

investments and project prioritization. BEP’s proposal for a new D.C. facility is not 

contingent on capital decisions made for its Fort Worth facility.
Page 4 GAO-18-338 Currency Production Facility

its existing D.C. facility, we reviewed BEP studies and discussed potential 

uses of BEP’s current buildings with BEP, Treasury, and GSA officials.

We reviewed GSA documentation and previous GAO work on the building 

disposal process, and interviewed officials at BEP, Treasury, and GSA on 

their plans for the use of each BEP building depending on the selected 

alternative.

We conducted this performance audit from April 2017 to April 2018 in 

accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

BEP produces notes at the request of the Federal Reserve. Each year, 

the Federal Reserve determines how many currency notes are needed to 

meet the demand for currency. Federal Reserve and BEP officials then 

agree on a payment amount for note production, including costs 

associated with maintaining BEP’s facilities. The Federal Reserve’s 

payments are deposited into BEP’s revolving fund; the revolving fund is 

used for BEP’s operational expenses, including note production.5

According to Treasury officials, the revolving fund can pay for renovations 

and retrofitting of a production facility, but not for land purchase or new 

building construction.6 In 2016, the Federal Reserve paid around $660 

million for note production.

In order to cover all expenses associated with the Federal Reserve’s 

needs, including currency production, the Federal Reserve generates 

income primarily from the interest on their holdings of U.S. government 

securities, agency mortgage-backed securities, and agency debt acquired 

through open market operations. The Federal Reserve is required to 

transfer any surplus funds over $7.5 billion to the General Fund of the 

 5

See 12 U.S.C. § 420; 31 U.S.C. § 5142.

6

Treasury officials based this interpretation, in part, on a 1951 Comptroller General

decision, which determined that BEP’s revolving fund could be used for the cost of 

replacements and additions of such equipment and installations as elevators, air 

conditioning, water cooling, electrical, plumbing and heating equipment, permanent and 

semi-permanent partitions, and flooring. See B-104492, Oct. 4, 1951.

Background
Page 5 GAO-18-338 Currency Production Facility

U.S. Treasury.7 Increases or decreases in operating costs or BEP’s 

currency production could affect these surpluses and subsequent 

transfers to the General Fund. Historically, the Federal Reserve has had 

significant surpluses. In 2016, the Federal Reserve transferred $92 billion 

to the General Fund.

BEP’s Washington, D.C., facility consists of a 104-year old, multi-story, 

multi-wing Main Building and an 80-year old multi-story, multi-wing Annex 

Building (see fig. 1). The Main Building is the primary production building, 

and the Annex Building is used primarily for administrative functions. Both 

buildings qualify for historic designation and thus any alterations would be 

subject to certain requirements under the National Historic Preservation 

Act of 1966, as amended.8 In addition to these buildings, BEP leases a 

warehouse in Landover, Maryland, to store production supplies in part 

because the two Washington, D.C., buildings do not have the necessary 

infrastructure to accommodate shipments carried by large commercial 

trucks.9

 7

12 U.S.C. § 289 (a)(3).

8

See Pub. L. No. 89-665, 80 Stat. 915 (Oct 15, 1966) (codified as amended at 54 U.S.C. 

§§ 300101-307108).

9

In March 2012, BEP renewed a 10-year lease with GSA to continue use of the 

warehouse. BEP rents the building through GSA from a private owner, and makes part of 

the building available for use by other Treasury components through interagency 

agreements. According to GSA officials, the cost to BEP is approximately $2.9 million per 

year after payments from other Treasury components.
Page 6 GAO-18-338 Currency Production Facility

Figure 1: Aerial Views of the Bureau of Engraving and Printing’s Washington, D.C., and Fort Worth, Texas, Facilities

Note: The figure does not include the warehouse in Landover, Maryland

BEP’s Fort Worth facility was built in order to ensure reliable currency 

production in the event of any disruption of operations at the D.C. facility.

BEP was able to obtain donated land and a building in Fort Worth and 

therefore did not need to purchase land or construct a new facility.10

Specifically, in 1986, BEP accepted a proposal from the City of Fort 

Worth that included 100 acres of donated land and a donated building 

shell to be built to BEP’s specifications. BEP then used its revolving fund 

to pay for the building’s interior retrofitting, including a central energy 

plant and installation of currency presses. The Fort Worth facility began 

 10The Department of the Treasury has the authority to accept gifts of real and personal 

property for the purpose of aiding or facilitating the work of the Department of the 

Treasury. 31 U.S.C. § 321(d)(1).
Page 7 GAO-18-338 Currency Production Facility

producing notes in December 1990 and was intended to produce around 

25 percent of U.S. notes. According to BEP officials, as a result of 

increased demand for U.S. notes and production limitations associated 

with the D.C. facility, the Fort Worth facility has produced an increasingly 

large share of notes. In fiscal year 2016 the Fort Worth facility produced 

nearly 60 percent of notes, while the D.C. facility produced the remaining 

40 percent.

From 2010 through 2017, BEP contracted for various studies to 

investigate alternatives, costs, potential sites, and program requirements 

to ensure future currency production in the D.C. area (see table 1 for 

details of the studies).11 In BEP’s 2013 study and since then, the agency 

has focused on three alternatives:

• “Renovation”—a major renovation of the current facility

• “New build”—a new building in a different location that would house 

currency production and all administrative functions

• “Hybrid”—a new building in a different location that would house 

currency production, but having administrative functions in one of its 

current buildings

According to BEP officials, the cost estimates in the 2013 study were an 

important factor in their preference for a new facility instead of a 

renovation.

 11Bureau of Engraving and Printing, Feasibility Study for Renovation and/or Relocation of 

the Washington, DC Facility (Dec. 15, 2010); Bureau of Engraving and Printing, Facility 

Strategic Alternatives Study (Jan. 23, 2013); Federal Agency Initial Site Investigation and 

Screening (Sept. 30, 2015); Bureau of Engraving and Printing, Future Workplace 

Recommendations Report (Aug. 17, 2017)

BEP’s Proposal for a 

New Production 

Facility Considered 

Project Costs and 

Feasibility, Security, 

Efficiency, Safety, and 

Future Flexibility

BEP Studies from 2010 to 

2017 Determined the Cost 

and Feasibility of Multiple 

Alternatives
Page 8 GAO-18-338 Currency Production Facility

Table 1: Studies Related to a New Production Facility Commissioned by the Bureau of Engraving and Printing (BEP) Since 

2010

Date Completed December 2010 January 2013 September 2015 August 2017

Purpose Identify and rank nine 

alternative solutions for 

future BEP operations

Review and rank 

three alternatives 

(new build, 

renovation, and 

hybrid) to continue 

production in the 

Washington, D.C. 

area

Identify and rate potential 

sites for a new BEP 

production facility within 30 

miles of the Washington 

Monument

Identify program requirements and 

cost estimates for (1) the hybrid and 

(2) renovation alternatives.

Conclusion Ranked the new build 

option highest

Ranked the new 

build option highest

Identified 31 federal and 

non-federal sites

Estimated the cost for (1) the hybrid 

option at $1.389 billion and (2) 

renovation at $1.957 billiona

Source: GAO analysis of BEP data. | GAO-18-338

a

The cost estimate includes additional project costs determined by BEP.

The 2013 study concluded that BEP should pursue the new build 

alternative because it was estimated to be the least costly option, could 

be completed in the shortest time frame, and promised the greatest 

efficiencies. The study found that the renovation alternative would be the 

most costly option and take the longest time to complete because it would 

require BEP to produce currency at its current location while it was being 

renovated. BEP officials told us this would require moving production 

equipment from the Main Building to the Annex during the renovation and 

back to the Main Building once it was renovated.12 According to GSA 

officials, renovations are often more costly than new construction.

According to Federal Reserve officials, moving large, complex printing 

presses and machines from one building to another and then back again 

significantly expands the renovation’s timeframe, as time would be 

needed to test the machines to get them back into specification. The 

Federal Reserve further noted that some modern presses will not fit into 

the Main Building without significant structural alterations, which would 

add cost and time to a renovation.

Following the release of the 2013 study, BEP proposed to the Secretary 

of Treasury, with the support of Treasury officials, that Treasury and BEP 

pursue the hybrid alternative as their first choice (see table 2 for details 

on BEP’s proposal). BEP officials told us that they, along with Treasury, 

 12Federal Reserve officials noted that equipment past its useful life would most likely be 

replaced with new equipment and thus not be moved back into the Main Building. 

However, some equipment could be moved back into renovated space.
Page 9 GAO-18-338 Currency Production Facility

selected the hybrid alternative even though the hybrid was more 

expensive than the new build alternative. According to BEP officials, the 

cost difference between the hybrid and new build was outweighed by the 

value of maintaining administrative functions in Washington, D.C., to 

facilitate the day-to-day decision-making process among BEP, Treasury, 

and Federal Reserve officials. According to Treasury officials, the ability 

for other Treasury employees to co-locate in the Main Building after the 

repurposing is completed would also provide long-term cost benefits to 

Treasury because Treasury could save on expensive lease agreements 

in downtown Washington, D.C. Further, Treasury officials noted that it is

important that the Treasury Department maintain the Main Building as an 

asset because of its location and history, and Treasury officials prefer that 

BEP maintain some functions in the building. The 2017 study provided 

cost estimates of BEP’s and Treasury’s preferred hybrid option, as well as 

the renovation option that BEP officials said they would pursue if BEP 

does not receive the necessary legal authority to construct a new facility.

The study estimated that the hybrid option would cost approximately 

$1.389 billion and that the renovation option would cost approximately 

$1.957 billion.13

Table 2: Current and Proposed Use of Bureau of Engraving and Printing’s (BEP) Buildings in the D.C. Area under the Hybrid 

Alternative

Building Use

Current Proposed

Main Building Houses most production functions, some 

administrative functions, and public tour

Would house primary BEP administrative functions and visitor 

center; remaining two-thirds of space could house other 

Treasury bureaus and offices

Annex Building Houses most administrative functions and 

some production functions

Would be declared excess and enter GSA’s disposal process

Warehouse Stores production materials GSA lease would not be renewed once new facility is complete

New construction Not applicable Would house all production functions, some administrative 

functions, a gift shop, and space for a public tour

Source: GAO analysis of BEP data. | GAO-18-338

Federal Reserve officials told us they concur with the 2013 study that a 

new facility is warranted, that a renovation of the existing facility would be 

more costly than a new facility, and a renovation would not provide the 

same degree of efficiency. Federal Reserve officials said that they prefer 

the new build alternative because the 2013 study identified this alternative 

 13The cost estimates include additional project costs determined by BEP.
Page 10 GAO-18-338 Currency Production Facility

as the least expensive option, and would provide a modern, efficient 

manufacturing process. These officials also told us that, whatever 

alternative BEP pursues, the Federal Reserve will be financially 

responsible —whether it is for a new building,14 a renovated building, or 

the continuation of the currency production process in the D.C. facility.

BEP officials stated that they support a new building over a renovation 

because the new build would both be less expensive and have greater 

benefits than a renovation. Furthermore, BEP officials told us that while 

they prefer to remain in the D.C. area, they would approve of the 

construction of a new facility in a different location if necessary. However, 

BEP officials also told us that if BEP does not get the legal authority 

necessary to use its revolving fund to purchase land and build a new 

facility in 2018, BEP will pursue a renovation of the existing D.C. facility 

beginning at the end of 2018.

As a federal facility, BEP must meet physical security standards 

established by the Interagency Security Committee (ISC).15 According to 

an assessment conducted by BEP’s Office of Security16, the D.C. facility 

does not meet many of the necessary requirements for a facility of its 

security level. While certain security improvements, such as blast 

resistant windows or vehicle barriers, could be installed if the facility is 

renovated, other standards could only be addressed with a new facility.

Specifically, the current buildings are located in an urban center 

 14According to Federal Reserve officials, it is not clear if the Board currently has the 

authority to acquire land and pay for the construction of the building “shell” for a new BEP 

facility.

15The ISC, housed within the Department of Homeland Security, defines the criteria and 

process used to determine a facility’s risk level and the applicable physical security 

standards for each risk level. Exec. Order No. 12977, 60 Fed. Reg. 54411 (Oct. 24, 1995).

Each executive agency and department must cooperate and comply with the policies and 

recommendations of the ISC except where the Director of Central Intelligence determines 

that compliance would jeopardize intelligence sources and methods.

16Bureau of Engraving and Printing, Facility Risk Assessment (July 25, 2015).

BEP Considered Other 

Factors in Deciding to 

Propose a New Production 

Facility

Security
Page 11 GAO-18-338 Currency Production Facility

surrounded by buildings (see fig. 1 above). As a result, according to the 

assessment, the facility does not have a secure perimeter because it 

lacks the required setback between the building and any point where an 

unscreened vehicle can travel or park. BEP officials said that even after a 

renovation, the facility would continue to have inadequate setback 

distance. According to the assessment, the facility’s designation as a 

historic building also limits BEP’s ability to make changes to the current 

facility to meet the necessary level of protection. For example, the 

facility’s placement on the historic registry limits BEP’s ability to make 

certain structural changes that could mitigate the building’s chances of

progressively collapsing in the event of certain types of destructive 

attacks or actions. BEP’s Office of Security attributed certain security 

deficiencies to the facility’s limited setback distance and the buildings’ 

structure, and determined that the D.C. facility is at relatively high risk to 

threats such as an externally-placed portable explosive device.

BEP aims to provide quality banknotes in an efficient, cost effective 

manner.17 However, BEP officials concluded that the layout of the D.C. 

facility makes production less efficient than the Fort Worth facility. 

According to BEP production data, from 2013 to 2016, manufacturing 

costs were higher at the D.C. facility for all comparable denominations. 

For example, in 2016, production costs of $1 and $20 notes were 23 

percent and 7 percent higher, respectively, at the D.C. facility compared 

to the Fort Worth facility.18 Additionally, the D.C. facility employs more 

manufacturing personnel than Fort Worth, even though it produces fewer 

notes (see table 3). BEP officials attributed the difference in the costs to 

the D.C. facility’s multi-floor, multi-wing production layout. Specifically, in 

D.C., after notes are printed on one side, they are moved to another floor 

to dry for at least 72 hours, brought back to the original floor to be printed 

on the opposite side, and again moved to the other floor to dry. In Fort 

Worth, because the production occurs in one large room on one floor, 

these processes occur in adjacent spaces on the same floor. As a result, 

according to BEP, notes travel more than twice as far during production in 

the D.C. facility.

 17Bureau of Engraving and Printing, 2014-2018 Strategic Plan.

18Manufacturing cost includes depreciation costs. Each note costs a different amount 

because of variations in processes and materials used. Note production is divided 

between the two facilities, but each facility does not produce every denomination.

Therefore, only the $1 and $20 programs are comparable between the two facilities.

Efficiency
Page 12 GAO-18-338 Currency Production Facility

Table 3: Fiscal Year 2016 Production Reported by the Bureau of Engraving and 

Printing (BEP) at Washington, D.C., and Fort Worth, Texas, Facilities

D.C. facility Fort Worth 

facility

Percentage of notes produced 42% 58%

Distance travelled by currency paper 5,615 feet 2,230 feet

Manufacturing cost per 1,000 $1 notesa $29.62 $24.07

Manufacturing cost per 1,000 $20 notesb $47.59 $44.61

Number of manufacturing employeesc 464 422

Source: GAO analysis of BEP data. | GAO-18-338

Note: We did not independently validate the accuracy of these figures.

a

Manufacturing cost includes depreciation costs.

b

Each note costs a different amount because of variations in processes and materials used. Note 

production is divided between the two facilities, but each facility does not produce every 

denomination. Therefore, only the $1 and $20 programs are comparable between the two facilities.

c

Number of employees is as of September 2017

According to BEP, Treasury, and Federal Reserve officials, a new 

production facility would offer greater efficiency gains than a renovated 

facility. According to BEP officials, maintaining production on one floor in 

an open space improves production efficiency. They added that a 

renovation of the D.C. facility could include tearing down some walls and 

raising ceilings, steps that could improve some production processes.

However, they also noted that because the D.C. facility qualifies for a 

historic designation, according to BEP officials, a renovation could not 

alter the building’s shape. As a result, production would still occur on 

multiple levels and in separate wings if the facility were renovated. We 

have reported in the past that agencies faced challenges in rehabilitating 

and modernizing historic buildings for contemporary use because of their 

age, specific design characteristics, and their particular historical 

features.19

According to its Strategic Plan, BEP is committed to providing a safe and 

positive work environment for its employees. However, BEP officials said 

that manufacturing employees at the D.C. facility face greater injury risk 

than at the Fort Worth facility. According to BEP workers’ compensation 

claim data, approved workers’ compensation claims at the D.C. facility 

accounted for approximately 67 percent of BEP’s approved claims from 

 19GAO, Federal Real Property: Improved Data Needed to Strategically Manage Historic 

Buildings, Address Multiple Challenges, GAO-13-35 (Washington, D.C.: Dec. 11, 2012).

Safety
Page 13 GAO-18-338 Currency Production Facility

fiscal year 2013 through fiscal year 2016, or 200 of 297 approved claims.

BEP officials attributed the higher number of workers’ compensation 

claims in the D.C. facility to the relatively high number of employees 

needed to produce fewer notes (see table 3) and the increased 

opportunity for employee injury because production material must be 

transported farther and between floors. BEP officials estimated that 

approximately 65 to 70 percent of all worker injuries are related to 

materials handling.

BEP officials noted that there is an estimated $196-million deferredmaintenance backlog at the D.C. facility. This backlog includes 

maintenance to the facility’s electrical and architectural systems. Even if 

BEP had taken care of these maintenance issues in the past, it would not 

negate the need for a renovation or a new facility. BEP officials noted that 

a renovation would reduce some safety concerns, such as upgrading the 

facility’s electrical systems and adding more fire-rated exits as required by 

Occupational Safety and Health Administration regulations;20 however, a 

renovation would not be able to address the multi-floor production 

process that BEP officials attributed to employee injuries.

According to BEP officials, it is important for BEP to maintain flexible 

currency production to respond to production needs that may change 

over time. Specifically, BEP officials said that a production facility should 

have the ability to adapt to changes in production equipment. Both BEP 

and Federal Reserve officials told us that the new equipment likely will be 

larger than current machinery. According to a representative from a 

leading currency printing equipment manufacturer from which BEP buys 

its printing equipment, future equipment is unlikely to decrease in size.

BEP officials said that, while the D.C. facility could be renovated to 

accommodate larger equipment, it would not be possible to replicate the 

large, open production floor of the Fort Worth facility, which allows for 

simple installation of equipment. BEP officials told us that, unlike the 

current D.C. facility, a new production facility would be able to easily 

 2029 C.F.R. § 1910.36. The Occupational Safety and Health Administration (OSHA) within 

the Department of Labor sets and enforces workplace standards to assure safe and 

healthful working conditions.

Flexibility
Page 14 GAO-18-338 Currency Production Facility

accommodate the printing equipment necessary for security features that 

BEP is currently developing for the next currency redesign.21

Flexibility is also an important factor when considering the future demand 

for currency. The demand for currency fluctuates, and recent changes in 

how the public makes purchases could affect the demand for currency.

Some observers have noted that the increased use of new payment 

technologies—such as online banking and phone applications—as well 

as the rise in online purchases may lead to a substantially reduced 

demand for currency. In a few countries, such as Sweden, noncash 

transactions have become common and the demand for currency has 

fallen substantially.

In the United States, there are several indications that currency demand 

will not substantially decline within the next decade. For example, the 

yearly number of U.S. currency notes in circulation increased by 43 

percent from 2008 to 2016. In addition, the number of ATMs in the United 

States continues to grow, and a 2016 Federal Reserve study of consumer 

payment choice found that cash still accounted for 32 percent of all 

transactions, and more than 50 percent of transactions under $25.22 This 

continued strength in the demand of cash has several sources.23 Cash 

can be seen as a hedge against uncertainties, such as natural disasters 

or political or economic turmoil, and also has advantages related to 

privacy, anonymity, and personal data security. Moreover, according to 

the Federal Deposit Insurance Corporation, approximately 25 percent of 

U.S. households have limited access to the products and services of the 

banking industry, and therefore, these “unbanked” and “underbanked”

 21Additionally, a court order requires Treasury to “take such steps as may be required to 

provide meaningful access to United States currency for blind and other visually impaired 

persons...not later than the date when a redesign of that denomination is next approved 

by the Secretary of the Treasury.” Am. Council of the Blind v. Paulson, 581 F. Supp. 2d 1 

(D.D.C. 2008). BEP recommended pursuing a tactile feature as a potential means of 

identifying each denomination by way of touch. See 75 Fed. Reg. 28331 (May 20, 2010). 

As we previously reported, the Secretary of the Treasury approved BEP’s approach on 

May 31, 2011. See GAO, U.S. Currency: Reader Program Should Be Evaluated While 

Other Accessibility Features for Visually Impaired Persons Are Developed, GAO-14-823 

(Washington, D.C.: Sept. 26, 2014).

22The State of Cash, Cash Produce Office Federal Reserve System, November 2016.

23One source of U.S. currency demand is from people in other countries. About half of the 

outstanding value of U.S. currency is held outside the United States, largely in the form of 

$100 denominated notes. Foreign demand for U.S. currency derives from its role as a 

global reserve currency and reliable store of value.
Page 15 GAO-18-338 Currency Production Facility

populations, who may not have many alternative means of payment, rely 

largely on cash.

Federal Reserve and Treasury officials we spoke with do not believe that 

the use of cash in the U.S. will decline in any significant way over the next 

decade. In particular, the Federal Reserve predicts a continued rise in 

demand for cash over the next 10 years, despite the increased availability 

of noncash payment options, indicating that a new or renovated facility 

will still be required for currency production. According to BEP officials, a

new production facility would better manage the ebbs and flows in the 

future demand for currency than a renovation of the current facility.

Specifically, should production demand increase, a new production facility 

could be designed to easily scale to meet new production requirements.

Conversely, should the demand for currency decline in the coming years 

or substantially decline in the future, unused space in a new facility could 

be partitioned off and be used for other purposes or by another Treasury

agency.

Capital investments in infrastructure can require significant resources to 

construct, operate, and maintain over the course of their life-cycle.

Leading capital-planning practices can help agencies determine the 

resources needed to meet their mission, goals, and objectives and how to 

efficiently and effectively satisfy those needs throughout the capital 

decision-making process. As shown in table 4, we found that BEP’s 

capital investment decision-making process that resulted in its decision to 

pursue a new currency-production facility (as part of the previously 

BEP Generally 

Followed Leading 

Capital-Planning 

Practices, and Its 

2017 Cost Estimate 

Partially Met the 

Characteristics of a 

Reliable Cost 

Estimate

BEP Generally Followed 

Applicable Leading 

Capital-Planning Practices
Page 16 GAO-18-338 Currency Production Facility

described hybrid option) followed three applicable capital-planning 

leading practices and substantially followed the fourth.24

Table 4: GAO’s Assessment of the Bureau of Engraving and Printing’s Adherence to Leading Capital-Planning Practices for 

Its Proposed New Currency Production Facility

Leading practice Key Activities Assessment

Needs assessment • Considers the capability of existing resources as well as current information on asset 

condition. Using this information, an organization can make decisions about where to 

invest in facilities.

• Identifies the resources needed to fulfill both immediate requirements and anticipated 

future needs.

Followeda

Alternatives 

evaluation

• Determine how best to bridge performance gaps by identifying and evaluating 

alternative approaches.

• Before choosing to purchase or construct a capital asset or facility, leading 

organizations carefully consider a wide range of alternatives and funding options, such 

as using existing assets, leasing, or privatizing the activity

Substantially 

followedb 

Strategic linkage • Provide a long-range plan for the capital asset portfolio in order to meet the goals and 

objectives in the agency’s strategic plans.

• Agency strategic plans should identify capital assets and define how they will help the 

agency achieve its goals and objectives. 

Followeda

Long-term capital 

plan

• The long-term capital plan should be the final and principal product resulting from the 

agency’s capital-planning process. The capital plan should cover 5 years or more, 

updated annually or biennially, and should reflect decision makers’ priorities for the 

future.

• Capital plans should include a statement of the agency mission, strategic goals and 

objectives; and a description of the agency’s planning process.

Followeda

Source: GAO analysis of Bureau of Engraving and Printing’s capital planning process.| GAO-18-338

a

Followed: BEP provided evidence that it fully followed the activities associated with the practice.

b

Substantially followed: BEP provided evidence that it followed most of the activities associated with 

the practice.

Needs assessment: BEP followed this leading practice, which calls for 

comprehensively assessing the resources needed as a basis for 

investment decisions. BEP conducted a facility condition assessment in 

2004 that contributed to BEP’s effort to seek a new production facility, 

resulting in the studies from 2010-2017 discussed above. The 

assessment identified the current condition of the facility and the facility’s 

capabilities, including production inefficiencies that led BEP to begin a 

multi-year effort to determine its immediate and future infrastructure 

 24GAO, Executive Guide: Leading Practices in Capital Decision-Making. GAO/AIMD-99-32 

(Washington, D.C.: December 1998); and OMB, Capital Programming Guide, Supplement 

to Office of Management and Budget Circular A-11: Planning, Budgeting, and Acquisition 

of Capital Assets (2017).
Page 17 GAO-18-338 Currency Production Facility

needs. BEP also determined in 2004 that the agency had almost $200 

million in deferred maintenance needs. BEP officials told us that they 

consulted with Federal Reserve officials25 and concluded that it would not 

be prudent to spend substantial funds to address this deferred 

maintenance. For example, officials determined that it would not be 

prudent to replace the heating and plumbing systems while pursuing a 

new production facility. As a result, BEP deferred some maintenance 

items, such as replacing heating systems, which would not compromise 

safety and production. However, BEP officials said that they prioritized 

and maintained critical items, such as its cleaning and recycling systems, 

and implemented energy conservation initiatives to help reduce costs. As 

of October 2017, BEP’s deferred maintenance backlog was about $196 

million.

Alternatives evaluation: BEP substantially followed this leading practice, 

which calls for a determination of how best to bridge performance gaps by 

identifying and evaluating alternative approaches. As noted above, BEP 

first considered multiple alternatives on how to achieve its mission to 

efficiently produce banknotes. Further, BEP considered different methods 

to fund and obtain land and a shell for a new production facility (see table 

5). To evaluate alternatives for the location of a new facility, a contractor 

identified, in 2015, potential construction sites in the D.C. area and 

compared each site to a set of criteria. However, BEP officials told us that 

they discounted locations outside the metropolitan D.C. area because 

they believed it would be costly to relocate employees or hire and train 

new manufacturing personnel to replace employees who do not relocate.

BEP officials said that the few employees who relocated from the D.C. 

facility to the Fort Worth facility when it first opened were paid $50,000 

each for their move. Based on these factors, BEP focused on a D.C-area 

location and did not conduct an analysis of the financial implications of 

building a new facility outside the D.C. area, where construction or other 

costs could be less expensive.

 25The Federal Reserve is required to pay all costs incurred by BEP for the production of 

currency notes. 12 U.S.C. § 420. According to Federal Reserve officials, for expenses 

greater than $1 million, BEP notifies the Federal Reserve in accordance with an 

agreement codified in a Memorandum of Understanding between Treasury and the 

Federal Reserve. Federal Reserve officials told us this is not approval authority, but it 

gives the Federal Reserve the ability to ask questions before such large purchases are 

made. Federal Reserve officials told us that they have no document related to the 

maintenance needs and deferral of key maintenance activities; however, BEP may have 

informed Federal Reserve staff of its decision to defer such costs in light of Treasury’s 

pursuit of a new facility.
Page 18 GAO-18-338 Currency Production Facility

Table 5: Alternative Methods BEP Considered to Fund and Obtain Land and a Building for a New Production Facility

Method considered Justification given for not selecting an alternative

Donated land and 

building shell 

According to BEP officials, given the high value of land in the D.C. area, it is unlikely that a private entity or 

municipal government would donate land and a building shell.

Swap-construct 

exchange

BEP officials explored the idea of entering into a “swap-construct” exchange in which a private developer 

would build a new facility for BEP in exchange for title to BEP’s current building(s). However, GSA 

determined that a “swap-construct” exchange would not be feasible in this case because of the long timeline 

required to migrate the existing production equipment to a new production facility. In addition, GSA has 

limited experiences with swap-construct projects and recent attempts have been cancelled.a

Congressional 

appropriations 

BEP officials inquired about receiving congressional appropriations to fund the land purchase and 

construction, but Treasury, OMB, and GSA officials said that since the purpose of a new production facility 

would be to produce currency notes, the funds should originate from the Federal Reserve.

Federal Buildings Fund BEP and GSA officials discussed using funds appropriated from the Federal Buildings Fund to purchase 

land and construct a building; however officials believed that Congress would be unlikely to appropriate such 

funds since BEP does not pay rent into the Federal Buildings Fund.

Source: GAO analysis | GAO-18-338

a

GAO, Federal Real Property: Observations on GSA’s Canceled Swap Exchange Involving Buildings 

in the Federal Triangle South Area, GAO-16-571R (Washington, D.C.: June 16, 2016)

Strategic linkage: BEP followed this leading practice, which stresses the 

importance of linking plans for capital asset investments both to an 

organization’s overall mission and to its strategic goals. In the 2014-2018 

Strategic Plan, BEP noted that it would seek approval to proceed with the 

2013 study’s recommendation to construct a new production facility.

According to the strategic plan, a new production facility would help 

achieve BEP’s long-articulated strategic goal of being a printer of worldclass currency notes, providing its customers and the public with superior 

products through excellence in manufacturing and technological 

innovation. Furthermore, Treasury concurred with BEP’s assessment and 

added its request for legal authority to purchase land and build a new 

facility in the fiscal year 2018 President’s Budget proposal.

Long-term capital plan: BEP followed this leading practice, which calls for 

a capital plan that documents an agency’s decisions and describes its 

mission, planning process, and risk management, among other things.

BEP completed all of the key activities associated with this practice. For 

example, in its fiscal year 2018 capital investment plan, BEP lays out the 

purpose, goals, and benefits of a new currency production facility. It also 

notes the implications of exposing currency production to vulnerabilities 

relating to potential facility systems failures and inefficiencies.
Page 19 GAO-18-338 Currency Production Facility

A reliable cost estimate—a summation of individual cost elements—is 

critical to support the capital planning process by providing the basis for 

informed investment decision-making, realistic budget formulation and 

program resourcing, and accountability for results. BEP’s 2017 cost 

estimate includes a contractor-developed estimate of the cost for the 

construction of a new production plant and the repurposing of the Main 

Building for BEP’s administrative offices (the hybrid alternative) and a 

BEP-developed estimate of additional project costs, such as additional 

production equipment and real estate acquisition. We found this estimate 

partially met the four characteristics of a high-quality, reliable cost 

estimate (see table 6). In developing this estimate, BEP relied on GSA 

guidance that was available at the time.26 That guidance did not refer to 

leading practices for cost estimates that are identified in GAO’s Cost 

Guide. GSA has recently updated its guidance to refer to the leading 

practices in GAO’s Cost Guide, and BEP officials told us that they will 

follow this updated GSA guidance when developing any future cost 

estimates.

Table 6: GAO’S Assessment of the Extent to Which the Bureau of Engraving and Printing’s (BEP) 2017 Cost Estimate Meets 

the Characteristics of a High-Quality, Reliable Cost Estimate.

Characteristic Leading practice Overall 

assessment

Comprehensive • The cost estimate includes all life-cycle costs.

• The cost estimate completely defines the program, reflects the current schedule, and is 

technically reasonable.

• The cost estimate work breakdown structure is product-oriented, traceable to the 

statement of work/objective, and at an appropriate level of detail to ensure that cost 

elements are neither omitted nor double-counted.

• The cost estimate documents all cost-influencing ground rules and assumptions.

Substantially 

meta

 26The guidance is GSA, P-120: Project Estimating Requirements for the Public Buildings 

Service. GSA Office of the Chief Architect (Washington, D.C.: January 2007). According to 

GSA officials, GSA updated its guidance to include GAO’s best practices in August 2016, 

after BEP had begun the cost estimating process. 

BEP’s 2017 Cost Estimate 

Partially Met the Four 

Characteristics of a HighQuality, Reliable Estimate
Page 20 GAO-18-338 Currency Production Facility

Characteristic Leading practice Overall 

assessment

Well-documented • The documentation should capture the source data used, the reliability of the data, and 

how the data were normalized.

• The documentation describes in sufficient detail the calculations performed and the 

estimating methodology used to derive each element’s cost.

• The documentation describes step-by-step how the estimate was developed so that a 

cost analyst unfamiliar with the program could understand what was done and replicate 

it.

• The documentation discusses the technical baseline description and the data in the 

baseline is consistent with the estimate.

• The documentation provides evidence that the cost estimate was reviewed and accepted 

by management.

Partially metb

Accurate • The cost estimate results are unbiased, not overly conservative or optimistic, and based 

on an assessment of most likely costs.

• The estimate has been adjusted properly for inflation.

• The estimate contains few, if any, minor mistakes.

• The cost estimate is regularly updated to reflect significant changes in the program so 

that it is always reflecting current status.

• Variances between planned and actual costs are documented, explained, and reviewed.

• The estimate is based on a historical record of cost estimating and actual experiences 

from other comparable programs.

• The estimating technique for each cost element was used appropriately. 

Partially metb

Credible • The cost estimate includes a sensitivity analysis that identifies a range of possible costs 

based on varying major assumptions, parameters, and data input.

• A risk and uncertainty analysis was conducted that quantified the imperfectly understood 

risks and identified the effects of changing key cost driver assumptions and factors.

• Major cost elements were cross-checked to see whether results were similar.

• An independent cost estimate was conducted by a group outside the acquiring 

organization to determine whether other estimating methods produce similar results.

Partially metb

Source: GAO analysis of Bureau of Engraving and Printing’s cost estimates. | GAO-18-338

a

Substantially met: BEP provided evidence that it followed most of the practices associated with the 

characteristic.

b

Partially met: BEP provided evidence that it followed about half of the practices associated with the 

characteristic.

Comprehensive: BEP’s 2017 cost estimate substantially met the 

comprehensive characteristic. For example, the estimate included most 

life-cycle cost components, defined the program and its current schedule 

and included a consistent work breakdown structure. However, the 

estimate did not include operating and sustainment costs or information 

regarding the ground rules and assumptions used to develop the costs.

Well documented: BEP’s 2017 cost estimate partially met the welldocumented characteristic. For example, the estimate documented the 

source data and the technical assumptions used for the construction 
Page 21 GAO-18-338 Currency Production Facility

costs, which were reviewed by GSA and BEP personnel. However, 

documentation for the contractor’s estimate and its sources for the factors 

used in the estimate did not include details to enable an outside cost 

analyst to replicate the work. According to BEP officials, the cost data are 

the contractor’s proprietary data. BEP officials also told us that sources 

for the factors used were based on subject matter expert opinion.

Accurate: BEP’s cost estimate partially met the accurate characteristic.

While we found minor rounding errors and no errors in the model build-up 

calculations and did not find any calculation or adjustment errors in the 

estimate, the estimate nonetheless did not provide information regarding 

the bias of the costs and the appropriateness of the estimating technique 

used. However, BEP did follow industry standards to develop contingency 

costs for a pre-design estimate for a program that has not yet been 

authorized. We also found that $515 million of the internal estimate (37 

percent of the program’s total cost estimate) was based on 

undocumented subject matter opinion or escalated incorrectly from the 

2013 study estimate. Further, BEP’s estimate did not use the same 

construction year mid-point as its contractor for the inflation assumptions.

According to BEP officials, that lack is because BEP’s costs were 

projected based upon the contractor’s estimate of fiscal year 2022, while 

the production equipment was escalated to fiscal year 2021 because this 

is the projected year for purchasing equipment. The officials also 

acknowledged that this rationale, however, was not documented in the 

cost estimate. BEP clarified that the estimates did not explicitly state a 

confidence level because the estimate is in the pre-planning stage. They 

added that it is common in the design and construction industry that 

contingencies are applied to the estimate based on the completeness of 

design, and as the design progresses, these contingencies are reduced 

as more becomes known about the project. As there have not been actual 

costs yet, variances between planned and actual costs have not been 

documented, explained, and reviewed.

Credible: BEP’s 2017 cost estimate partially met the credible 

characteristic. For example, BEP provided documentation showing that 

both BEP and GSA reviewed the contractor’s construction estimate and 

its technical assumptions. However, the estimate did not include a 

sensitivity analysis for the construction costs, a risk and uncertainty 

analysis, or cross-checks to see whether similar results could be 

obtained. A cross-check could include an independent cost estimate 

conducted by an outside group to determine whether other estimating 

methods would produce similar results, but BEP officials told us that no 

independent cost estimate was developed because this was too early in 
Page 22 GAO-18-338 Currency Production Facility

the project to do such a comparison and that the construction estimate 

was developed in response to a government contract statement of work 

to prepare a preliminary budget forecast for BEP. Rather, BEP relied on 

what it characterized as an extensive review by BEP management and 

GSA officials.

The alternative that BEP pursues could have a financial effect on the 

federal government and ultimately taxpayers. Below, we discuss potential 

costs and potential savings associated with the disposition of the three 

buildings under the different scenarios based on our review of BEP 

documents and interviews with Treasury and GSA officials (see fig. 2).

For example, Treasury, which has custody and control over the Main 

Building and the Annex, could experience costs if it needs to spend 

money to upgrade these buildings, but could also experience savings if it 

can repurpose the buildings or consolidate its employees into fewer 

buildings. GSA, which serves as the federal government’s primary real 

property and disposal agent, could incur costs for the marketing and 

disposal process, but could create savings for the government if it could 

repurpose or sell any vacated buildings. Proceeds from sales of Treasurycontrolled facilities would benefit the federal government.

Ability to Sell or 

Repurpose Potentially 

Vacant Space Could 

Affect the Total Cost 

to the Federal 

Government
Page 23 GAO-18-338 Currency Production Facility

Figure 2: Potential Disposition and Funding of BEP’s Washington, D.C., Facility and Related Potential Costs or Savings

a

A “warm lit shell” is a commercial or residential building with a minimally finished interior, usually with 

ceilings, lighting, plumbing, heating and cooling (HVAC), interior walls (painted or unpainted), 

electrical outlets, elevators, rest rooms, and a concrete floor. A warm lit shell is considered ready to 

lease and ready for tenant improvements.
Page 24 GAO-18-338 Currency Production Facility

Note: The Federal Reserve deposits payments for currency production, including BEP’s operational 

expenses, into BEP’s revolving fund. BEP uses its revolving fund to pay for all of its operational costs.

While it is possible to identify some potential costs and benefits, it is too 

early to determine which costs or benefits may be realized or to attempt 

to quantify them. GSA and Treasury officials told us that the actions of 

other agencies or interested third parties (e.g., those potentially interested 

in purchasing the Annex) would affect the costs and cost-savings of any 

alternative. In addition, there are factors outside of the government’s 

control, such as timing and market conditions, that could affect costs and 

cost-savings. For example, changes in the Washington, D.C., real estate 

market could affect the opportunity to sell the Annex. Based on interviews 

with officials at GSA, Treasury, the Federal Reserve, and BEP, we have 

identified the following potential costs and savings for each building.

Potential costs and savings associated with the Main Building: Both BEP 

and Treasury officials told us that the Main Building will remain under 

Treasury’s custody and control, regardless of which alternative BEP 

undertakes.

• Renovation: BEP would use its revolving fund to replace existing 

heating/cooling systems and windows in the Main Building with higher 

efficiency ones. Ideally, there would be some long-term cost savings 

because the new systems would be less costly to operate. However, 

BEP officials told us that a renovation may be more expensive than 

currently estimated because the Main Building is over 100 years old 

and there could be unforeseen expenses depending on what is found 

once walls and ceilings are removed.

• New build: Treasury would likely pay to renovate the Main Building 

once BEP vacates it because the Main building would remain under 

Treasury’s custody and control. The cost of this renovation could be 

partially offset by savings associated with co-locating other Treasury 

offices in the Main Building after the renovation is complete. For 

example, Treasury bureaus currently have 15 leased facilities with 

about 1.9-million square feet in the downtown D.C. area. The annual 

cost of these facilities is $91.7 million. While, not all of the employees 

currently in leased space could move into a renovated Main Building, 

the Main Building’s 530,000 square feet could provide opportunities to 

reduce leasing costs. However, because these potential renovations 

and staff moves are not likely to occur for several years, Treasury 

officials told us that they are not able to determine either the costs or 

benefits of moving Treasury staff to the Main Building.
Page 25 GAO-18-338 Currency Production Facility

• Hybrid: BEP’s revolving fund would pay for the renovation of onethird of the Main Building that would serve as BEP’s administrative 

office and a future visitors’ center. This step would leave the 

remaining two-thirds to be renovated to a “warm lit shell”27 to allow 

others to occupy the building. At this time, Treasury does not know 

what entity or account would pay for the renovation of the remaining 

two-thirds because, according to Treasury officials, they have not 

determined what the use of the balance of the Main Building would 

be, including what entity would fund any modifications needed for new 

occupants. If Treasury decided to use the Main Building for its own 

staff, then Treasury could fund the cost to convert to offices for other 

Treasury agencies. Under this scenario, there is both a cost to 

Treasury to renovate the space it plans to use as well as a savings in 

having Treasury staff vacate other leased space and move to a 

Treasury-controlled building.

Potential costs and savings associated with Treasury’s Annex: The Annex 

could either remain for BEP’s administrative offices or could be declared 

excess and transferred to GSA for disposal.

• Renovation: BEP’s revolving fund would cover the cost of renovating 

the entire Annex as a “warm lit shell” and a more extensive renovation 

of the portion of the Annex that BEP would use first as temporary 

space for its currency printing equipment and then permanently for its 

administrative office. According to BEP officials, the Annex would be 

renovated to accommodate currency-printing lines that would be 

relocated from the Main Building in order for the Main Building to be 

renovated. Once the Main Building is renovated, the Annex would 

then be renovated to become administrative space for BEP. This 

process could be quite costly and take more time as the Annex would 

be renovated twice for different purposes. However, if the unused part 

of the Annex could be used by Treasury for other Treasury offices, 

there could be some cost savings to Treasury. According to BEP 

officials, while BEP would use its revolving fund to renovate the Annex 

to a “warm lit shell,” the agency that ultimately occupies the unused 

space would be responsible for the costs associated with repurposing 

that space for its own purposes.

 27A “warm lit shell” is a commercial or residential building with a minimally finished interior, 

usually with ceilings, lighting, plumbing, heating and cooling (HVAC), interior walls 

(painted or unpainted), electrical outlets, elevators, rest rooms, and a concrete floor. A 

warm lit shell is considered ready to lease and ready for tenant improvements.
Page 26 GAO-18-338 Currency Production Facility

• New build and Hybrid: BEP’s revolving fund would pay for any 

necessary environmental clean-up needed in order for the Annex to 

be declared as excess and transferred to GSA for disposal. GSA, as 

part of its mission, would incur costs such as marketing, conducting 

the disposition process, and concluding the property transfer. GSA’s 

disposal process can result in the building being transferred for use by 

another Federal agency, being sold to a local or state government via 

a negotiated sale, being conveyed to a public entity or eligible nonprofit for public uses (e.g. homeless use), or being sold to a private 

party via a public sale. As the Annex is centrally located in 

Washington, D.C., the building could be attractive to potential 

developers.28 GSA recently sold another federal building near the 

Annex for over $30 million. GSA officials believe that there would be 

significant market interest in the Annex due to the Annex’s location 

and recent private development in the area. Treasury and GSA 

officials stated that proceeds from the sale of the Annex would be 

deposited into the Land and Water Conservation Fund to benefit the 

federal government.29

On the other hand, there is no guarantee that GSA would be able to 

sell the Annex: our previous work found that the most frequent 

method of disposal for federal buildings from fiscal years 2011 

through 2015 was demolition (57 percent) rather than sale (14 

percent). Federal buildings identified for disposal may not be suitable 

for sale for reasons such as their age, location, and condition, factors 

that often make demolition the preferred disposal method. The unique 

configuration of the Annex with its five wings, its age and condition, 

and historic-designation eligibility could deter some potential buyers.

The future demand for the building, interest from private-sector 

buyers, and the general economic and real estate market are 

 28Part of the Annex is a small building known as the “Railroad Siding Building.” The 

building sits on a larger tract of land owned by a private developer. According to BEP 

officials, the land was transferred by the District of Columbia Redevelopment Land Agency 

to the developer subject to an easement that preserves BEP’s property interest in the 

building. BEP officials are uncertain as to what would happen to this property interest if 

Treasury declares the Annex as excess.

29According to Treasury officials, Treasury does not have the authority to retain proceeds 

from sales of its buildings. According to Treasury and GSA officials, the proceeds from the 

sale of the Annex would be deposited into the Land and Water Conservation Fund. See 

54 U.S.C. § 200302. Amounts in the fund must be appropriated before they can be used. 

Once appropriated, amounts in the fund are generally available for purposes related to 

land and water acquisitions for national parks, national forests, and national wildlife 

refuges, or as otherwise permitted in the appropriation act making them available. 
Page 27 GAO-18-338 Currency Production Facility

uncertain and can change quickly. If the Annex is not sold and 

remains on the government’s real property inventory, generally BEP 

or Treasury would be responsible for any annual maintenance costs 

for the building.30 Alternatively, the unsold Annex could be donated to 

a state or local government that would then be responsible for 

maintenance costs.

Potential costs and savings associated with the leased warehouse: The 

warehouse is a GSA-leased property.

• Renovation: BEP would continue its annual leasing of the 

warehouse, which would still be needed to accommodate large trucks 

that cannot access the D.C. facility. The current lease costs 

approximately $3.4 million each year, and BEP recovers about 

$500,000 per year of these costs by permitting other Treasury 

components to use the building through interagency agreements.

• New build and Hybrid: If BEP discontinued its lease after a new 

facility is completed, it would save approximately $2.9 million per year.

If BEP ended its lease prior to the end of the lease term, GSA would 

need to find another entity to occupy the warehouse for the remainder 

of the lease term.

We provided copies of the draft report to the BEP, GSA, the Federal 

Reserve, and Treasury for review and comment. BEP coordinated with 

Treasury in providing comments. In these comments, reproduced in 

Appendix I, BEP emphasized the factors that led BEP to determine that a 

new facility is the preferred alternative for its currency production process 

and acknowledged our findings on those factors. BEP and the Federal 

Reserve also provided technical comments, which we incorporated as 

appropriate. GSA did not provide comments.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Director of the Bureau 

of Engraving and Printing, the Secretary of the Treasury, the Chair of the 

Federal Reserve Board, and the Administrator of the General Services 

 30Generally, the landholding agency is responsible for the cost of protection and 

maintenance of excess or surplus property until the property is transferred or disposed, 

but generally not for more than 15 months. 41 C.F.R. § 102-75.970.

Agency Comments
Page 28 GAO-18-338 Currency Production Facility

Administration. In addition, the report will be available at no charge on the 

GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or RectanusL@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix II.

Sincerely yours,

Lori Rectanus

Director, Physical Infrastructure Issues
Appendix I: Comments from the Department of 

the Treasury

Page 29 GAO-18-338 Currency Production Facility

Appendix I: Comments from the Department 

of the Treasury
Appendix I: Comments from the Department of 

the Treasury

Page 30 GAO-18-338 Currency Production Facility
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 31 GAO-18-338 Currency Production Facility

Lori Rectanus, (202) 512-2834 or RectanusL@gao.gov

In addition to the individual named above, John W. Shumann (Assistant 

Director); Martha Chow (Analyst in Charge); Amy Abramowitz; Lacey 

Coppage; Delwen Jones; Jennifer Leotta; Josh Ormond; and Tomas 

Wind made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101990)
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