Dear Secretary LaHood:
Recently, my staff spoke with the Office of the Inspector General (OIG) to discuss the“Cash for Clunkers" program. As Ranking Member of the Committee on Finance (Committee),it is my constitutional duty to conduct oversight into the actions of the Executive Branch,including the activities of the Department of Transportation (DOT).
The Consumer Assistance to Recycle and Save Act of 2009 (CARS/Program) was passedas part of the Supplemental Appropriations Act of 2009 that was introduced in Congress on May12, 2009 and signed into law on June 24, 2009. In essence, CARS was intended to helpconsumers pay for new, more fuel efficient cars or trucks from a participating dealer when theytraded in less fuel efficient vehicles. This legislation originally provided for $1 billion for autodealers and on August 7, 2009 the President and Congress appropriated an additional $2 billionfor CARS.
Pursuant to the legislation, the DOT had only 30 days after the date the legislation wasenacted into law to engage contractors and stand up the Program before the first rebates wereissued. It is my understanding that the original legislation provided $50 million to cover thecosts of these contracts, but no specific funding provision for the contractors was included withthe additional $2 billion that was provided for the Program. To date the Administration has notprovided an accurate accounting of the administrative costs related to the Cash for Clunkersprogram and I believe that the American taxpayer deserves more information, not less, and thatinformation needs to come sooner rather than later.
A. Contracting
In addition to auditing the individual transactions of the Cash for Clunkers program, I aminterested in the corporations and executive branch agencies that received contracts from theDOT to process thousands of transactions generated by CARS. It seems to me that theAdministration chose an inherently risky approach to developing and implementing the Cash forClunkers program and spent millions to get it up and running in record time with little regard forproper oversight and accountability; thus creating an environment ripe for waste, fraud andabuse.
It is my further understanding that the DOT contracted with the followingcorporations/agencies to support either directly or indirectly the Cash for Clunkers program:
• Citibank, N.A.;
• Vangent;
• Affiliated Computer Services (ACS);
• the Internal Revenue Service (IRS); and the
• Federal Aviation Administration (FAA) in Oklahoma City, OK.
In light of this, I have the following questions about the contractors and the contract(s)they received pursuant to CARS. For each question throughout this letter, please respond by firstrepeating the enumerated question followed by the appropriate answer:
1) Please confirm that the list above is complete and if not please provide a completelist of the contractors and executive branch agencies that received funds to assistin the implementation of the Cash for Clunkers program?
2) Please set forth how much each of these contractors received to date and theanticipated total that they will receive once the books are closed on CARS?
3) What type of contract did the contractors receive? (e.g. time and materialcontracts, fixed price contracts, cost and cost plus contracts, or all otherscontracts)
4) Please explain whether or not other types of contracting vehicles were consideredand what was the reasoning for choosing one type of contract over another?
5) Please describe in detail the process used to select the corporations/agenciesidentified in the response to question 1 above?
6) What, if any, bonuses were (are being) paid to the contractors upon completion oftheir respective contracts?
B. Vulnerabilities to the CARS IT System
The CARS legislation also included a provision requiring the Secretary of Transportationto consult with the OIG to “establish and provide for the enforcement of measures to prevent andpenalize fraud." It is my understanding that the OIG pointed out a number of possiblevulnerabilities, especially with the IT system, which experiencedsignificant problems in the Cash for Clunkers program. In light of this please respond to thefollowing questions:
1) What was the overall effect of the IT disruptions on the implementation of the program?
2) Please provide documentation of the DOT’s IT vulnerability and testingrecommendations.
3) Please describe in detail the criteria the DOT used to determine allowed costs versusdisallowed costs for the IT system?
C. OIG Recommendations and Related Implementation
Furthermore, it is my understanding that the OIG made a number of recommendationsand pointed out many additional program vulnerabilities. However, I am concerned that theDOT may not have fully complied with the OIG consultative provision as the CARS programwas being implemented. Therefore I would like clarification of the role the OIG played and theactions taken by the DOT to respond to those recommendations.
1) What vulnerabilities were identified for the DOT by the OIG?
2) At what point in the process did the DOT ask for this information from the OIG andhow was it requested?
3) How were the OIG concerns and recommendations incorporated into the Cash forClunkers program as it was being implemented? Please be specific.
In cooperating with the Committee’s review, no documents, records, data or information related tothese matters shall be destroyed, modified, removed or otherwise made inaccessible to the Committee.
Sincerely,
Charles E. Grassley Ranking Member
cc: The Honorable Calvin L. Scovel, III Inspector General U.S. Department of Transportation
1200 New Jersey Avenue, SE Washington, DC 20590
