Summary: The Federal Reserve System has the general responsibility for distributing and circulating U.S. currency. This includes the delivery of newly printed currency to the Reserve Banks and the continuing circulation of currency and coin between the Reserve Banks and member commercial banks. GAO was asked to review the Federal Reserve System's currency transportation operations to determine the adequacy of the Federal Reserve's security over currency transportation and whether the Federal Reserve Bank's procurement of armored car services has adhered to competitive bidding practices.
GAO found that, although security specifications throughout the Federal Reserve System have changed over the last 10 years, there has been no wholesale deterioration. Most security specifications have become more precise in recent years. GAO also found that the system-wide total number of armored carrier incidents has increased over the last 10 years. However, GAO does not believe that changes in the Federal Reserve security specifications have influenced the number or type of incidents that have occurred. It is unlikely that a single factor is responsible for the rise in the number of armored carrier incidents. A possible factor that would help explain the increase is simply the increase in the amount of currency transported. However, GAO believes that monitoring incidents is useful in evaluating carrier performance. Finally, GAO found no evidence that the Federal Reserve's security standards influence other users in the type of security specifications they require in armored car contracts. Other users rely on the carrier's expertise in the security area and the existence of insurance as ultimate protection.
