Security of U.S. Passports Called Into Question Why are key components outsourced to country in turmoil?

June 14, 2010  -- The U.S. government agency that prints passports has for years failed to resolve persistent concerns about the security risks involved in outsourcing production to foreign factories, a joint investigation by ABC News and the Center for Public Integrity has found.

"On a number of levels this is extremely troubling," said Clark Kent Ervin, a former inspector general at the Department of Homeland Security. "Something like that ought to be produced only in the United States, under only the most rigorous security standards." A report on the outsourcing of U.S. passports to high-risk countries can be seen on World News with Diane Sawyer tonight.

Despite repeated assurances they would move production to the U.S., a key government contractor has continued to assemble an electronic component of the nation's new, more sophisticated passport in Thailand.

The factory is near the same Bangkok suburb where a notorious terrorist extremist was captured in 2003. There have been bursts of violence in the industrial city, Ayutthaya, as recently as last month.

Both the inspector general at the Government Printing Office and the agency's own security chief have warned specifically against producing the computer chip assembly in the Thai facility. One internal report obtained by ABC News and the Center for Public Integrity warned of a "potential long term risk to the [U.S. government's] interests."

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The top official at the GPO, Robert Tapella, declined requests to be interviewed on the subject. ABC News caught up with Tapella at an industry conference in Baltimore to ask him why repeated warnings about the security of the passport supply chain have not been resolved.

Tapella said government contractors were in the process of moving work on the passport out of Thailand and into a newer facility in Minnesota. "I believe the Government Printing Office along with the Department of State, are doing everything necessary to maintain and secure the passport supply chain," he said.

The Thai factory was one of several concerns raised in an inspector general's audit earlier this year that looked into the way the GPO is producing the new e-passport – a passport that is supposed to be impenetrable to counterfeiters because it stores information on an embedded computer chip that is tucked into the cover.

Experts agree that passport production is a critical homeland security concern, given that possession of an American passport can help a traveler bypass some of the stringent reviews conducted of those entering the U.S. from abroad. Ervin described the document as an EZ-pass into the United States, something officials say terrorists know all too well.

GPO's inspector general has warned that the agency lacks even the most basic security plan for ensuring that blank e-Passports -- and their highly sought technologies – aren't stolen by terrorists, foreign spies, counterfeiters and other bad actors as they wind through an unwieldy manufacturing process that spans the globe and includes 60 different suppliers.

This disturbs Rep. John D. Dingell, D.-Mich., who wrote letters to the agency two years ago raising questions about passport production.

"Regrettably, since then, our fears have been realized because the inspector general and other people in charge of security at the government printing office have pointed out that the security is not there," Dingell told ABC News. "There is no real assurance that the e-passports are safe or secure or are not in danger of being counterfeited or corrupted or used for some nefarious purposes by terrorists or others."

Dingell said the agency needs to make good on years of promises to move production of the chip assembly into the U.S.

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Gary Somerset, a spokesman for the agency, said the process of moving production into the U.S. is well along. He estimated that only about one in five chip assemblies are still put together in the Thai factory, and said the agency has pledged to move out of Thailand completely by the end of July.

At the Ayutthaya plant, Thai workers create assemble inlays that embed wireless transmitters and sophisticated computer chips that store personal information used by customs and border guards to verify the identities of those who enter the United States. The inlays are shipped back to Germany and eventually the full e-Passport is assembled in the U.S.. There remains disagreement about whether the theft of blank computer chips assemblies could enable someone to clone an e-passport.

Ari Juels, the chief scientist at RSA Laboratories, a Cambridge-based security research group, said the risk is that someone could take information from a stolen passport and imprint it on a blank chip, which could then be embedded into a forgery. "Getting a hold of an inlay might help someone to create an authentic looking copy," he said.

Somerset said that has never happened, to his knowledge. "There has been no security breach in the electronic passport supply chain," he said.

Officials at the Dutch contractor that owns the chip assembly plant in Thailand, Smartrac, also told ABC News that it has tightened security there since the first concerns were raised inside GPO. A company spokeswoman also said employees "undergo a background check to assure that highest security standards are not only met in terms of production environment but also in terms of personnel."

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But none of that comforts Robert Sheridan, a retired customs agent and former GPO investigator who has followed the security issue for years.

"A passport is the keys to entry into the kingdom," Sheridan said. "Somebody better wake up."

John Solomon is a reporter with the Center for Public Integrity, a nonprofit investigative journalism organization.

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