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'Cash for Clunkers' has cost $77M to run

By Ed O'Keefe


Updated 5:47 p.m. ET

The Department of Transportation has spent $77 million on administrative costs to run the popular “Cash for Clunkers” incentive program and anticipates spending no more than $100 million as it ties up the final details, according to department sources. News of the price tag comes as a top Senate Republican has asked for a full accounting of operational costs and the private firms hired to help process payments.

Administrative costs to date for the Consumer Assistance to Recycle and Save Act (CARS) total less than 3 percent of the $3 billion program, DOT 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, DOT 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 Federal Aviation Administration, among others, according to a DOT report provided to Congress late last year.

“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 thirty 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.

DOT’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 more administrative costs when it later approved a $2 billion infusion. Administrative costs included the amounts paid to contractors that reviewed dealer submissions, built internal databases and the CARS Web site and to pay salaries and travel expenses for National Highway Traffic Safety Administration staff that worked on the program, DOT 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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By Ed O'Keefe  | January 6, 2010; 12:45 PM ET
Categories:  Agencies and Departments, Oversight  
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