Grassley seeks accounting of 'Cash for Clunkers' costs

Vehicles traded in as part of the "Cash for Clunkers" program are parked at junkyard in Sun Valley, Calif., awaiting their disposal.
Vehicles traded in as part of the "Cash for Clunkers" program are parked at junkyard in Sun Valley, Calif., awaiting their disposal. (Damian Dovarganes/associated Press)
By Ed O'Keefe
Washington Post Staff Writer
Thursday, January 7, 2010

A top Senate Republican has asked for a full accounting of the "Cash for Clunkers" incentive program as the Department of Transportation puts the finishing touches on last summer's economic boost to the struggling auto industry.

A report submitted to Congress in late December said the department has spent $77 million on administrative costs to run the Consumer Assistance to Recycle and Save Act, commonly known as CARS or by the Clunkers meme. The popular program provided up to $4,500 to customers trading in older vehicles. Congress added an additional $2 billion to the program last summer amid unexpectedly high demand.

The department anticipates spending no more than $100 million as it ties up the final details, according to agency sources.

Costs to date total less than 3 percent of the $3 billion program, the department said. Approximately $2.85 billion has been paid out to participating automotive dealerships, and more than 99 percent of the payments have been finalized. The remaining funds may be used for maintaining and storing databases, information requests and any related investigations, the department said.

But Sen. Charles E. Grassley (R-Iowa) wrote to Transportation Secretary Ray LaHood this week requesting details of the department's contracts with companies and federal agencies that administered the program. The department contracted with Citibank, Vangent, Affiliated Computer Services, the Internal Revenue Service and the Federal Aviation Administration, among others, according to the DOT report.

"There hasn't been an accounting of the administrative costs of the program," Grassley said in his letter. "There also hasn't been publicly available information about how contractors were picked to process the thousands of transactions that the program generated. My concern is the waste, fraud and abuse that may have resulted from the vulnerabilities that can come with such a quick start."

"The overwhelming consumer response to CARS required the DOT to rapidly expand capacity in order to process more than 670,000 dealer transactions made in less than 30 days," said DOT spokeswoman Olivia Alair. "Throughout the life of the program, the DOT took measures to prevent fraud, waste and abuse. While there was no time to allow vendors to competitively bid for the processing work, those selected received contracts based on other recent competitively bid government contracts for similar work." Further information on the companies selected was not readily available, Alair said.

The Transportation Department's inspector general and the Government Accountability Office must complete audits of CARS by early May, and those reports are expected to cover much of the information Grassley requested. Aides said Grassley's request for information was made to ensure the final reports include specific information about the firms and agencies hired.

Last summer, Congress set aside $50 million to administer the $1 billion program but did not appropriate additional administrative costs when it approved the $2 billion infusion. Administrative costs included funds paid to contractors that reviewed dealer submissions, built internal databases and the CARS Web site, and money to pay salaries and travel expenses for National Highway Traffic Safety Administration staff members who worked on the program, the department said.

Grassley also wants to know what caused significant delays with the CARS Web site that left many auto dealers and customers waiting hours, if not days, to process vouchers.

"It seems taxpayers deserve a full report for the money that was spent on this program in the event that a similar program, maybe for a different purpose, is set up in the future," Grassley said.

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