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Highlights

In the Energy Independence and Security Act of 2007, Congress mandated higher vehicle fuel economy by model year 2020 and established the Advanced Technology Vehicles Manufacturing (ATVM) loan program in the Department of Energy (DOE). ATVM is to provide up to $25 billion in loans for more fuel-efficient vehicles and components. Congress also provided $7.5 billion to pay the required credit subsidy costs--the government's estimated net long-term cost, in present value terms, of the loans. GAO was asked to review the ATVM program and agreed to (1) identify the steps DOE has taken to implement the program, (2) examine the program's progress in awarding loans, (3) assess how the program is overseeing the loans, and (4) evaluate the extent to which DOE can assess progress toward meeting its goals. GAO analyzed loan documents and relevant laws and regulations and interviewed DOE and ATVM officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy To help ensure the effectiveness and accountability of the ATVM program, the Secretary of Energy should direct the ATVM Program Office to accelerate efforts to engage sufficient engineering expertise to verify that borrowers are delivering projects as agreed.
Closed - Implemented
Since issuance of our report GAO-11-145, DOE changed its budgeting practices for monitoring ATVM loans to better ensure that funds would be available to engage independent engineering expertise when needed. DOE also changed its policy for engaging technical expertise, making it the same as for the Title XVII loan guarantee program. These actions should better enable DOE to engage necessary engineering expertise for monitoring ATVM loans and are in line with our recommendation to accelerate efforts to engage sufficient engineering expertise to verify that borrowers are delivering projects as agreed. More specifically, as of February 28, 2011, when GAO made its recommendation, DOE had not yet engaged independent engineering expertise to monitor the loans it had made, in spite of policy calling for this action. DOE officials stated that such expertise had not yet been needed and that the agency would engage such expertise in the future. According the Chief Operating Officer for DOE's Loan Program Office, an impediment to engaging engineering expertise was paying for it, since the statute authorizing ATVM required that the loans be made with no transaction cost to the borrowers, requiring DOE, and not borrowers, to pay the costs of engaging independent engineering expertise. This differs from DOE's Title XVII loan programs, in which borrowers are required to fund the costs of such monitoring. In September 2015, the Chief Operating Officer for DOE's Loan Programs Office stated that, in the early days of the ATVM program, and at the time GAO wrote GAO-11-145, the agency had not fully budgeted the funds needed to implement enhanced technical monitoring; that is, engaging an independent engineer with needed automotive industry experience. He clarified that the agency had since implemented practices to ensure that the technical monitoring for ATVM loans would be done in the same manner as other DOE loan programs and that the Loan Programs Office now includes estimates in its annual budget requests of the funds it needs to engage independent engineering expertise for loan monitoring of both existing and potential future loans. We consider this recommendation to have been implemented.
Department of Energy To help ensure the effectiveness and accountability of the ATVM program, the Secretary of Energy should direct the ATVM Program Office to develop sufficient and quantifiable performance measures for its three goals.
Closed - Not Implemented
In its original comments to our report GAO-11-145, and in a subsequent statement of its management decisions, DOE stated that it disagreed with our recommendation that the Secretary of Energy direct the ATVM Program Office to develop sufficient and quantifiable performance measures for its three goals. DOE stated its belief that the ATVM program adhered to the requirements of the statute authorizing the program and that the performance measures suggested by GAO would greatly expand the scope of the program--DOE stated it would not develop any new measures not specified by Congress. DOE also noted concerns that the measures GAO specified would create an additional research burden for the program.

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