By Ryan Beene, Crain News Service
WASHINGTON (June 23, 2015) — Auto makers will be expected to provide greater detail — and face tougher scrutiny — with the quarterly reports they submit to federal regulators about crashes possibly linked to safety defects.
The National Highway Traffic Safety Administration (NHTSA) said it will tighten its early-warning reporting requirements by next June as part of sweeping changes it has agreed to make following a blistering audit by the U.S. Transportation Department's Office of Inspector General.
The audit, formally released June 22 after copies were leaked June 19, found that NHTSA's ability to monitor auto safety defects was severely undermined by poor staff training; haphazard collection and analysis of safety defect data; and inconsistent processes for deciding how and when to open defect investigations.
The findings are a stinging rebuke of the agency that NHTSA Deputy Administrator David Friedman steadfastly defended before multiple congressional panels last year in the wake of the General Motors Co. ignition-switch crisis.
The yearlong probe was prompted by GM's recall of 8.7 million vehicles for the faulty ignition switches, now linked to more than 117 deaths and 237 injuries, and it details several occasions as far back as 2003 when NHTSA overlooked or ignored opportunities to identify the safety defect in the switches.
The DOT's inspector general also made 17 recommendations to overhaul NHTSA's internal processes. In his official response to the audit, Administrator Mark Rosekind, who already has set major reforms in motion, pledged to complete work on the recommendations by next June.
Improved early warnings
Included in those recommendations: Auto makers must create and follow new processes for the early-warning reports they submit to NHTSA quarterly on injuries or deaths related to possible safety defects, and those processes will be subject to periodic review by NHTSA. The agency, in turn, will revamp the format of the early-warning filings and the information collected in them. The current reports are “of little use” to NHTSA defect investigators, according to the audit.
The early-warning reporting system — created by the 2000 TREAD Act that followed the Ford Motor Co.-Firestone tire recalls — was intended to identify vehicle defects early, before they become broad threats to public safety and prompt massive, costly recalls for manufacturers.
But according to the inspector general's audit, manufacturers have had wide latitude on what information they provide and how they categorize possible defects. Manufacturers routinely “mis-categorize” safety incidents in the reports, the audit says, skewing data collection and distorting decisions whether to refer the reports for further investigation.
Despite the thousands of components in modern cars, NHTSA has just 24 broad defect categories and provides manufacturers little guidance for how to use them. A failure of an airbag contained in a seat, for instance, could be categorized three different ways, the report says.
NHTSA also fails to periodically monitor how auto makers handle their early-warning reports internally, according to the report. The director of NHTSA's Office of Defects Investigation, Frank Borris, told auditors that the agency “relies on the ‘honor system.'”
Indeed, it wasn't until American Honda self-reported in October that it had failed to include more than 1,700 death and injury claims in its early-warning reports since 2000 that NHTSA took action, even though it was aware of the issue as early as late 2011, according to the report.
The audit also found major shortcomings in training of NHTSA staffers. For example, three staffers assigned to analyze airbag defect incidents had no training in airbags.
The audit also blasted NHTSA's defects investigation process, saying the agency fails to use sound methods to analyze defect data; that consumer complaints aren't thoroughly screened; and that decisions about whether to open a formal defect investigation that could lead to a recall are haphazard and improperly documented.