ANTI-CAR THEFT

ACT

Issues Concerning

Additional Federal

Funding of Vehicle

Title System

United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Consumer Affairs, Foreign Commerce

and Tourism, Committee on Commerce,

Science, and Transportation, U.S. Senate

August 1999

GAO/GGD-99-132

United States General Accounting Office General Government Division

Washington, D.C. 20548

Page 1 GAO/GGD-99-132 National Motor Vehicle Title Information System

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August 13, 1999

The Honorable John Ashcroft

Chairman, Subcommittee on Consumer Affairs,

 Foreign Commerce and Tourism

Committee on Commerce, Science,

 and Transportation

United States Senate

Dear Mr. Chairman:

Congress passed the Anti-Car Theft Act of 19921

 in response to what it

considered to be the nation’s number one property crime—motor vehicle

theft. Title II of the act required the designation or establishment of a

National Motor Vehicle Title Information System (NMVTIS). The act

requires that NMVTIS, among other things, allow users to instantly and

reliably validate out-of-state motor vehicle titles for states that are retitling

a vehicle and provide a history of the vehicle being retitled (e.g., the

vehicle’s previously recorded odometer reading and any salvage

information). The Department of Justice is responsible for NMVTIS’

development and implementation. The American Association of Motor

Vehicle Administrators (AAMVA)2

 has a cooperative agreement with

Justice to develop and test NMVTIS. AAMVA is working with seven states3

to have them develop and test the capability to interface their motor

vehicle titling systems with NMVTIS.

In your letter dated July 23, 1998, you expressed concern about the

development of NMVTIS. Accordingly, we agreed with your office to

determine (1) the current status of NMVTIS and (2) whether Justice had

evaluated NMVTIS’ expected costs and benefits to ensure that additional

federal investment in NMVTIS is justified. We interviewed Justice and

AAMVA officials and reviewed NMVTIS-related information regarding

NMVTIS’ development, operational testing, and cost estimate

determination. We discussed with these officials NMVTIS’ design and

implementation. Also, we visited with officials in Virginia and Arizona,

 

1

 P.L. 102-519, Oct. 25, 1992, 49 U.S.C. Chapter 305, 311.

2

 AAMVA is a voluntary, nonprofit, tax exempt, educational association representing U.S. and Canadian

officials who are responsible for the administration and enforcement of motor vehicle laws.

3

 The seven states are Arizona, Florida, Indiana, Kentucky, Massachusetts, New Hampshire, and

Virginia. We use the term “states” to include the 50 states and the District of Colombia.
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which are participating in NMVTIS and are in different stages of progress

in developing the capability to interface their state motor vehicle titling

systems with NMVTIS, and Texas and the District of Columbia, which are

currently not participating in NMVTIS. We surveyed the 4 states that we

visited and the 47 states4

 that we did not visit to obtain their views

regarding NMVTIS. See appendix I for a more detailed discussion of our

objectives, scope, and methodology, including our state survey.

We conducted our work between September 1998 and June 1999 in

accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from Justice and AAMVA

officials. Their comments are discussed in the appropriate sections of the

report and near the end of this letter.

Justice has not evaluated NMVTIS’ expected life-cycle costs and benefits

to ensure that additional federal funding is justified. The Clinger-Cohen Act

of 19965

 and best practices used by public and private organizations to

manage information technology investments suggest that such an

evaluation will provide an analytical basis for informed investment

decisions.

As of March 1999, AAMVA expected the development and implementation

of NMVTIS to cost about $34 million. AAMVA is expected to update this

estimate when its seven-state test of NMVTIS is finished. AAMVA

estimated that test would be completed within the first quarter of calendar

year 2000. Through fiscal year 1999, Congress has provided Justice and the

Department of Transportation (DOT) with about $8 million of an expected

$22 million federal investment in NMVTIS.6

 The states and AAMVA and its

contractors would be expected to provide the remaining $12 million.

NMVTIS was designed to allow users to electronically validate an existing

vehicle title and title-related information. However, a potential barrier to

electronically validating titles and title-related information could be the

lack of full participation by all state departments of motor vehicles.

Although 43 states of the 47 states responding to our survey thought that

 4

 We received responses from the 4 states that we visited and from 43 of the 47 remaining states. The

responses were from all 7 participating states and 40 nonparticipating states.

5

 The Clinger-Cohen Act of 1996 (P.L. 104-106) generally directs agencies to consider alternative

solutions to information technology problems, to perform life-cycle cost benefits analyses, and to

select the most appropriate alternative. The Clinger-Cohen Act does not directly apply to NMVTIS,

since it is being developed and operated by a third party, AAMVA. However, the principles of ClingerCohen provide an effective framework of information technology investment management.

6

 DOT was initially responsible for NMVTIS.

Results in Brief
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they could implement NMVTIS and 32 states of the 40 nonparticipating

states had expressed an interest in doing so, 27 of the 47 states were

concerned about how they would fund NMVTIS.

We are recommending in this report that the Attorney General (1) perform

a life-cycle cost benefit analysis to determine if additional federal

investment in NMVTIS is justified and (2) provide additional federal funds

for NMVTIS only if such funding is supported by the analysis.

The Anti-Car Theft Act was designed to reduce automobile theft by making

the selling of stolen cars and parts more difficult. According to 1992

congressional testimony, thieves turned stolen cars into money in three

ways. They (1) took the stolen car to a chop shop where the car was

dismantled and its parts were sold as replacement parts for other vehicles,

(2) obtained an apparently valid title for the car and then sold it to a third

party (the area that NMVTIS is expected to address), or (3) exported the

vehicle for sale abroad. In 1995, the National Insurance Crime Bureau

(NICB) estimated that the value of stolen vehicles, which are subsequently

titled each year, amounted to over $240 million.7

 NICB estimated that the

loss associated with total vehicle theft and fraud was in excess of $7.6

billion, annually.8

 The Anti-Car Theft Act originally required DOT to develop a national

motor vehicle title information system by designating an existing system or

establishing a new system. The act was amended by the Anti-Car Theft

Improvements Act of 1996, which, among other things, transferred

responsibility for development and implementation of NMVTIS from DOT

to Justice. In an August 22, 1996, memorandum, the Deputy Attorney

General delegated responsibility for implementing the NMVTIS project to

the Federal Bureau of Investigation (FBI). According to Justice, the FBI’s

role with respect to NMVTIS is to

• ensure that the system meets the intent of the act as it pertains to the FBI

and law enforcement activity;

• ensure that the system meets the law enforcement needs of state, local,

and federal law enforcement agencies;

 

7

 NICB is a private, nonprofit organization that provides investigative resources and information to its

membership of property and casualty insurance companies. See National Motor Vehicle Title

Information System (NMVTIS): Fraud Cost Analysis Report, National Insurance Crime Bureau, (1995).

8

 According to an NICB official, this estimate does not include losses due to odometer fraud.

Background
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• provide guidance to AAMVA, the system administrator, concerning law

enforcement issues and items related to system testing and national

implementation; and

• analyze the issue of the use and dissemination of vehicle theft data.

Justice’s Office of Justice Programs provides funding for NMVTIS.

According to Justice and DOT officials, Congress has provided, through

appropriation acts and congressional guidance in conference reports,

about $8 million to conduct the test of NMVTIS during fiscal years 1996

through 1999. DOT awarded $890,000 in fiscal year 1996 to AAMVA. After

receiving responsibility for NMVTIS in 1996, Justice awarded $1 million in

fiscal year 1997 Byrne Discretionary Grant Program funding to AAMVA.

According to AAMVA, it has passed the $1.89 million it has received from

DOT and Justice to the seven participating states.

In June 1999, Justice awarded $2.8 million in fiscal year 1998 funds to

AAMVA to (1) continue funding the participating states, (2) add new states,

and (3) recover some of its costs as a technical assistance provider to the

seven participating states. According to AAMVA, $2 million is for the states

and $800,000 is for AAMVA. Justice added that AAMVA cannot draw on

these funds until a memorandum of understanding between it and the FBI

is executed. The conference report accompanying the fiscal year 1999

appropriations states that Justice is to spend $3.15 million for NMVTIS.9

NMVTIS is being designed and tested by AAMVA and is intended to, if fully

implemented, deter trafficking in stolen vehicles by making it harder for

thieves to obtain seemingly valid titles for stolen vehicles by retitling them

in another state. This is because, using NMVTIS, the copy of the motor

vehicle title presented for retitling would be electronically validated

against the database of the state that originally titled the vehicle. Thus,

NMVTIS would help prevent thieves from obtaining good titles to vehicles

that they intend to resell. In addition, when the title is reissued in another

state, NMVTIS would electronically cancel the motor vehicle title in the

originating state. Presently, retitling between states is done manually, with

states mailing information about a vehicle being retitled. According to

AAMVA officials, NMVTIS would also prevent fraudulent use of duplicate

motor vehicle titles.

 

9

 H.R. Conf. Rep. 105-825 (1998) accompanying the Departments of Commerce, Justice and State, the

Judiciary, and Related Agencies Appropriations Act, 1999, P.L. 105-277.

NMVTIS’ Potential Benefits
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NMVTIS is also intended to protect prospective purchasers by

accomplishing the following:

• Make “title washing” more difficult. Title washing is a type of title fraud in

which vehicle brand history is removed from the title by retitling the

vehicle in another state that does not carry a particular brand. This is done

to make it easier to pass the vehicle to a third party who is otherwise

unaware of the brand.10

• Provide access to brand data that would help purchasers to determine the

market value and safety of the vehicle prior to purchase.

• Provide odometer readings, which would help purchasers determine if the

vehicle mileage has been improperly rolled back to a lower number.

AAMVA expects titling states, law enforcement agencies, car dealers,

insurance companies, and individual prospective purchasers to use

NMVTIS. According to AAMVA, private companies and individuals would

be able to access NMVTIS to verify titles and check vehicle history

information, such as previous odometer readings and title brands.

However, private companies and individuals currently do not have access

to the stolen vehicle file in NMVTIS. According to AAMVA officials,

AAMVA is working with Justice and other law enforcement officials who

are involved with overseeing and managing the system containing stolen

vehicle data to see if these data can be made available to private

companies and individuals.

The act authorized system users to be charged a fee for obtaining data.

AAMVA said that it is constructing the system so that state departments of

motor vehicles and law enforcement agencies are to be exempt from the

fee. According to AAMVA officials, no fees have been charged to any user,

as of July 20, 1999. They added that AAMVA and its contractors have been

absorbing all costs associated with NMVTIS’ operations and no federal

funds have been used to support its operations, as of July 20, 1999.

While the U.S. Customs Service did not provide direct input or

coordination to Justice or AAMVA during NMVTIS’ development, it

 

10 A vehicle’s “brand” indicates that a qualifier is attached to the title. This qualifier indicates some

imperfection in the vehicle. Examples include vehicles that have a junk or salvage status or have had

water damage from a flood. At least one state has a “reconstructed” brand that indicates a salvage

vehicle that has been rebuilt. NMVTIS uses a uniform set of codes to interpret various types of brands,

which are often different in each state.
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anticipates realizing many benefits from NMVTIS when it becomes fully

operational. Customs expects to be able to connect its computer systems

to NMVTIS. Customs also expects that NMVTIS will be able to provide it

with a greater ability to identify and detect stolen vehicles before they are

exported from the United States. According to AAMVA officials, AAMVA

expects to work with Customs to test NMVTIS at two ports.

AAMVA’s design of NMVTIS includes the following four files:

• A theft file, which contains information on all vehicles reported stolen

nationwide and is a “mirror” image of the FBI’s national stolen vehicle

database from its National Crime Information Center.11 The FBI pointed

out that the act does not mandate the use of Center data and the use of the

Center mirror image was approved only for the seven participating states.

• A brand file, which maintains data on vehicle brands from various sources,

including insurance companies and junk and salvage yard operators.

• A manufacturers’ certificate of origin (MCO) file, which contains vehicle

origination information from the manufacturer, such as make, model, or

color.

• A vehicle identification number (VIN) pointer file, which electronically

directs a NMVTIS user to the state where the vehicle was last titled and

would be used to validate the previous title and obtain various vehicle

history information.

NICB, which is an AAMVA contractor, has developed and is maintaining

the theft file, which it received from the National Crime Information

Center. AAMVA will provide the brand file. The MCO file and VIN pointer

file have been developed and are being maintained by The Polk Company,

which is also an AAMVA contractor.12

 

11 Information on stole vehicles is contained in the National Crime Information Center. The center is a

computerized criminal justice information system in which federal and state law enforcement agencies

maintain and share millions of records in 14 files, including files on fugitives, missing persons, and

stolen vehicles.

12 The Polk Company is a privately held, for-profit company that has developed national information

systems and information products for the motor vehicle marketplace.

NMVTIS’ Design, Testing,

and Evaluation
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To test NMVTIS in operation, AAMVA agreed with seven states to have

them develop their computer software to interface with NMVTIS. The test

in the seven participating states is to allow for an evaluation of the

• technical feasibility of NMVTIS,

• degree of success in meeting the 1992 Act’s requirements,

• areas that would benefit from federal rulemaking,

• estimated costs of implementation and operation, and

• time it will take the remaining states to develop interfaces to NMVTIS.

As of March 18, 1999, the seven participating states were developing the

capability to interface with NMVTIS files and were in various stages of

testing the interface. AAMVA expects completion of the test within the

first quarter of calendar year 2000 and its evaluation of the results shortly

thereafter. AAMVA has prepared an evaluation plan for testing NMVTIS.

The evaluation plan includes an assessment of NMVTIS’ ability to meet the

act’s requirements. According to AAMVA officials, AAMVA expected to

complete its preliminary evaluation of NMVTIS by the end of July 1999.

AAMVA’s March 19, 1999, cost estimate for a fully implemented NMVTIS is

$33.9 million—that is, $24.2 million for states to develop new systems or

adapt existing ones to link with NMVTIS and $9.7 million for AAMVA and

its contractors to develop and implement NMVTIS. AAMVA expects the

federal government to fund $22.2 million, which is to be used to offset

$16.5 million of the states’ costs and to reimburse AAMVA for $5.7 million

in its role as the technical assistance provider. AAMVA and its contractors

will be responsible for the additional $4 million. AAMVA expects the states

to fund their remaining costs ($7.7 million). NMVTIS’ operation and

maintenance costs will be the responsibility of the states and AAMVA and

its contractors. As previously mentioned, the states and AAMVA and its

contractors can charge system users a fee for information provided.13

According to AAMVA, its estimate of the costs the states would incur is

based on the participating states’ actual costs plus other factors, such as

inflation. AAMVA estimated that the development costs for other states

would average about $425,000 per state. In developing its estimate, AAMVA

stated that it assumed that the 7 participating states’ costs would be

representative of the nonparticipating states, and that the other 44 states

would participate in NMVTIS. According to AAMVA officials, Indiana,

 

13 States and law enforcement agencies are exempt from fees.

AAMVA’s Estimated

Cost of NMVTIS
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Kentucky, and Virginia have fully implemented NMVTIS.14 The other four

states may continue to incur additional unanticipated costs, which could

impact AAMVA’s projected cost estimate for the nonparticipating states.

As previously discussed, AAMVA expects to report on the results of the

participating states’ efforts to interface their titling systems with NMVTIS

in calendar year 2000. At that time, on the basis of the updated costs of 7

states and contractors, as well as its own costs, an AAMVA official said

that AAMVA will revise the projected costs for the 44 nonparticipating

states and NMVTIS’ total cost.

Assuming that AAMVA’s test of NMVTIS proves that NMVTIS will work as

designed and will provide the benefits intended by the Anti-Car Theft Act,

those benefits will be diminished if all states do not participate in NMVTIS.

Of the 40 nonparticipating states responding to our survey, 32 states said

that they were interested in participating in NMVTIS. According to 27 of

the 47 responding states, the lack of funding is a major reason for

nonparticipation. In addition, there are technical issues that may limit the

effectiveness of NMVTIS, and Justice has raised issues about AAMVA’s

accounting deficiencies regarding the use of the federal funds.

The Anti-Car Theft Act did not mandate that all states participate in

NMVTIS. However, the National Highway Transportation Safety

Administration has reported that all states need to participate in NMVTIS

to ensure the act’s effectiveness in preventing title fraud. AAMVA and

NICB have also stated that less than full participation by all states could

make the vehicle history information, including title brands, incomplete

since the nonparticipating states would not be providing data on-line. Also,

instant title verification available from the VIN pointer file, or any vehicle

history information maintained by nonparticipating states (such as vehicle

title brands), would not be available through NMVTIS.

AAMVA officials said that periodic updates of the VIN pointer and brand

files with data from nonparticipating states are planned. These updates

would provide some nonparticipating state data to those files, although

those files would not be as effective as they could be if all states were

participating in NMVTIS.

 

14 According to AAMVA officials, a state has implemented NMVTIS if it can perform all NMVTIS-related

transactions.

Barriers to Realizing

NMVTIS’ Potential

Benefits

Less Than All States’

Participation
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We surveyed all 50 states and the District of Columbia to determine their

interest in participating in NMVTIS and their views on NMVTIS. We found

the following:

• 43 of the 47 total respondents (participants and nonparticipants) thought

NMVTIS could be implemented in their state;

• 32 of 40 nonparticipating states responding to our survey expressed

interest in participating in NMVTIS, and, of the 8 other states, 2 said they

were planing to express interest in participating and 6 said resources or

other priorities precluded their participation; and

• 27 of 47 states indicated that funding or resources could be a barrier to

their successful implementation of NMVTIS.

An AAMVA official believes that federal funding to states would help

alleviate the funding barriers. He told us that 23 states had expressed their

written interest to AAMVA about participating in NMVTIS. AAMVA

officials added that they would not ask additional states to commit to

participate in NMVTIS until additional federal funding becomes available.

According to AAMVA officials, nonparticipating states would not be able to

use NMVTIS to immediately verify out-of-state vehicle titles or obtain

vehicle history information, including any brands, prior to issuing a new

title. In addition, AAMVA officials told us that, when a state that is

participating in NMVTIS retitles a vehicle previously titled in another state,

it could not electronically and instantly cancel the old title if that other

state is not participating in NMVTIS. According to AAMVA officials,

participating states would have to rely on a mailed notification they

receive from the nonparticipating state that issued the old title.

The Anti-Car Theft Act, as amended, required Justice to report to Congress

by October 1998 on states’ participation in NMVTIS and barriers to state

participation. As of April 22, 1999, FBI officials said that the report is in the

process of being completed.

In commenting on a draft of this report, AAMVA said that on the basis of

its experiences, states become more motivated to participate in the system

as states in close proximity to them implement the system. It added that,

on the basis of discussions and increased interest, it expects all states to

participate in NMVTIS within a reasonable time period.
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Three of the seven participating states indicated that they are experiencing

problems with duplicate VINs. AAMVA officials told us that duplicate VINs

are caused by data entry errors, fraudulent title documents, or states that

did not cancel their title record when the vehicle was retitled in a new

state. AAMVA has developed procedures for overcoming the problem

relating to duplicate VINs in the pointer file. While VINs may be duplicated

in the pointer file, the states of title and the title numbers will not be

duplicated. According to AAMVA officials, the states and AAMVA can use

these additional identifiers to distinguish the vehicles with duplicate VINs

and correct the problem by manually matching the correct title of the

vehicle to the correct VIN.

An AAMVA official said that the participating states and AAMVA are

currently working on a solution to the duplicate VIN problem with respect

to the theft and brand files. This is necessary because the NMVTIS theft

and brand files have no other identifiers to distinguish vehicles with the

same VIN. Also, according to AAMVA officials, as more states join

NMVTIS, the duplicate VINs would be eliminated through troubleshooting

efforts. AAMVA believes that, eventually, duplicate VINs would become a

rare occurrence.

As of May 14, 1999, the MCO file in NMVTIS was incomplete. According to

AAMVA officials, the MCO file did not contain data from all manufacturers.

AAMVA and The Polk Company are presently working on getting all

manufacturers to provide information. According to AAMVA officials, the

major domestic vehicle manufacturers are now reporting to the MCO file,

and The Polk Company is working on getting foreign manufacturers to also

provide information.

According to AAMVA officials, states believe that the MCO file is of value

because electronic verification of MCO data would be handled like title

data. They added that adding the MCO data is expected to take time

because the MCO data are not required by law.

On January 28, 1999, Justice audited AAMVA to determine if AAMVA was

properly accounting for the receipt and expenditure of fiscal year 1997

funds. Justice reported that AAMVA (1) allowed excessive consultant fees,

which exceeded the maximum allowable amount by $89,371; (2) could not

provide supporting documentation for payments totaling $300,000 to

Arizona; (3) did not maintain adequate support for amounts claimed on

their quarterly financial reports; and (4) did not adequately administer

contractual arrangements with the states. Justice awarded $2.8 million in

fiscal year 1998 funds to AAMVA. However, release of the funds is

Duplicate VINs

Incomplete MCO File

AAMVA Needs to Address

Accounting Deficiencies
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contingent on AAMVA’s satisfactory resolution of deficiencies contained in

the Justice audit report. The impact of Justice’s decision to hold up the

release of the funds on AAMVA’s timetable for full implementation of

NMVTIS is not known.

According to Justice, most of these deficiencies have been resolved;

however, the Office of Justice Programs will not release more funds until

all deficiencies have been resolved. According to AAMVA officials, as of

July 27, 1999, AAMVA has provided all the required documentation to

Justice and, therefore, in its opinion, the accounting issues should not be

an impediment to the release of the funds.

Justice has not evaluated NMVTIS’ expected life-cycle costs and benefits

to ensure that additional federal funding is justified. The Clinger-Cohen Act

of 1996 and the best practices used by public and private organizations to

manage information technology investment would provide an analytical

basis for informed investment management decisions.

Neither the FBI nor the Office of Justice Programs has performed the

analysis. Justice assigned responsibility for overseeing development of

NMVTIS to the FBI, but FBI officials told us their assigned responsibility

did not extend to life-cycle cost benefit analysis and economically

justifying NMVTIS. The FBI officials agreed, however, that such an analysis

should be done.

As previously discussed, AAMVA will evaluate the results of the efforts of

the seven participating states to interface with NMVTIS. Its evaluation

should provide important data that Justice should include in its life-cycle

cost benefit analysis. While AAMVA’s evaluation will be limited to the

seven participating states, Justice should use the results to assess the

ability of the states to address the problems initially identified (e.g.,

duplicate VINs and incomplete MCO file). In addition, Justice could

analyze the estimated costs to the federal government by using the current

costs of the seven states. In estimating the benefits from NMVTIS, Justice

will have to determine the likelihood that the 44 nonparticipating states

will join NMVTIS. If less than full state participation is expected, Justice

will then have to assess the impact on the ability of NMVTIS to provide the

expected benefits.

Despite not having done the analysis to determine if NMVTIS is worth

continued federal investment, Justice is planning to fund additional states

after the accounting deficiencies are addressed. AAMVA does not expect

the final evaluation of the results from the participating states to be

Justice Has Not

Determined If NMVTIS

Warrants Additional

Federal Investment
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available before early in calendar year 2000. AAMVA’s plans call for

moving forward with implementation this year. AAMVA pointed out that

the preliminary evaluation, which will include an evaluation of the system

design feasibility, is due at the end of July 1999.

AAMVA plans to (1) add three or four states to NMVTIS and provide

federal funds to the states for their interface with NMVTIS, (2) begin a test

with law enforcement users, and (3) visit seven additional states to

prepare them for interfacing with NMVTIS. AAMVA plans to add the

remaining states between fiscal years 2000 and 2003. AAMVA anticipates a

fully implemented NMVTIS by 2004, which will include all 50 states and the

District of Columbia in a nationwide system.

The results of AAMVA’s test of NMVTIS may provide data for Justice to

determine whether NMVTIS, as designed, could achieve the benefits

envisioned in the Anti-Car Theft Act. However, more federal funding will

be needed to fully implement NMVTIS. The full benefits may not be

achieved if some states do not participate in NMVTIS. Therefore, we

believe it would be unwise to commit additional federal funding until (1)

AAMVA has completed the preliminary evaluation of the current test and

(2) Justice has analyzed whether the benefits of NMVTIS, as designed, and

less-than-full participation in NMVTIS would justify the continued federal

investment.

We recommend that the Attorney General (1) perform a life-cycle cost

benefit analysis to determine if additional federal investment in AAMVA’s

design of NMVTIS is justified and (2) provide additional federal funds for

NMVTIS only if such funding is supported by the analysis.

Justice and AAMVA provided their comments on a draft of this report on

July 22 and 20, 1999, respectively. Justice and AAMVA provided technical

comments, which we included where appropriate. Justice officials

generally concurred with the draft report. They said that the Office of

Justice Programs agrees that life-cycle cost benefit analysis is a good idea

and will perform this analysis using funds from the fiscal year 1999

earmark. Justice officials said that to maintain the ongoing development of

NMVTIS and to determine whether it merits additional funding before an

evaluation can be undertaken in 2000, the Office of Justice Programs has

stipulated that AAMVA must demonstrate that three of the participating

states are fully operational before funds may be obligated for new states.

In addition, the Office of Justice Programs will not obligate funds from the

1999 earmark for further expansion of NMVTIS until the life-cycle cost

benefit analysis has been completed. Justice officials said that, under the

Conclusions

Recommendations

Agency Comments and

Our Evaluation
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proposed memorandum of understanding, the FBI would participate with

AAMVA in the evaluation of the analysis of the seven participating states.

AAMVA officials said that our recommendation to put the system on hold

until a life-cycle cost benefit analysis can be done would interrupt the

system in each state, delay new states’ implementations, and interrupt the

momentum of the system and result in increased costs. AAMVA

recommended that its preliminary report serve as justification for

continued federal funding until Justice completes its analysis. AAMVA

expects that the preliminary results will show NMVTIS’ feasibility.

We recognize that time will be needed to perform a life-cycle cost benefit

analysis, and that such an analysis may cause some delay in NMVTIS’

implementation, which may contribute to additional costs. However, using

additional federal funds without such an analysis could result in much

greater costs if NMVTIS were to prove to be ineffective.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no additional distribution of this report until 30 days from

its date. At that time, we will send copies to Senator Richard H. Bryan,

Ranking Minority Member of this Subcommittee, and to Senator Robert C.

Byrd, Senator Orrin G. Hatch, Senator Patrick J. Leahy, and Senator Ted

Stevens and Representative John Conyers, Jr., Representative Henry J.

Hyde, Representative David Obey, and Representative C.W. Bill Young in

their capacities as Chairman or Ranking Minority Member of Senate or

House Committees. We are also sending copies of this report to the

Honorable Jacob J. Lew, Director, OMB; the Honorable Janet Reno, the

Attorney General; and representatives of AAMVA; NICB; and The Polk

Company. We will also make copies available to others upon request.
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If you have any questions regarding this letter, please contact me or James

M. Blume at (202) 512-8777. Key contributors to this assignment were

Ronald J. Salo, Michael H. Harmond, and Anne M. Rhodes-Kline.

Sincerely yours,

Norman J. Rabkin

Director, Administration of

 Justice Issues
Page 15 GAO/GGD-99-132 National Motor Vehicle Title Information System
Page 16 GAO/GGD-99-132 National Motor Vehicle Title Information System

Contents

1 Letter

Appendix I 18

Objectives, Scope, and

Methodology

Abbreviations

AAMVA American Association of Motor Vehicle Administrators

DOT Department of Transportation

FBI Federal Bureau of Investigation

MCO manufacturer's certificate of origin

NICB National Insurance Crime Bureau

NMVTIS National Motor Vehicle Title Information System

VIN vehicle identification number
Page 17 GAO/GGD-99-132 National Motor Vehicle Title Information System
Appendix I

Objectives, Scope, and Methodology

Page 18 GAO/GGD-99-132 National Motor Vehicle Title Information System

Our objectives were to (1) determine the current status of the National

Motor Vehicle Title Information System (NMVTIS) and (2) determine

whether Justice had evaluated NMVTIS’ expected costs and benefits to

ensure that additional federal investment in the system is justified. We

analyzed NMVTIS cost data and expected benefits and the barriers that

could prevent the benefits from being fully realized. In doing our analysis,

we relied on the Clinger-Cohen Act of 1996 guidance for criteria regarding

an effective framework for information technology investment

management.

We spoke with officials from the Department of Justice, the Federal

Bureau of Investigation (FBI), the American Association of Motor Vehicle

Administrators (AAMVA), and AAMVA’s two contractors—The Polk

Company and the National Insurance Crime Bureau. Specifically, we

discussed their efforts regarding the life-cycle process of system design

and implementation consistent with best practices in both the public and

private sectors of information technology investments. We also met with

officials from two of the seven participating states (Arizona and Virginia)

regarding their progress in the NMVTIS test. We selected Arizona and

Virginia because they had completed or were expected to complete

programming of their titling processes in preparation for beginning the test

of NMVTIS. In addition to Arizona and Virginia, we met with officials from

two nonparticipating states, Texas and the District of Columbia, which we

selected primarily because of their proximity to the two participating

states we visited.

We obtained AAMVA’s cost estimate for a fully implemented system in all

50 states and the District of Columbia and their basis for that estimate. We

obtained, from Justice and AAMVA officials, federal funding appropriated

as well as anticipated funding. We also obtained from AAMVA officials the

distribution of the federal funding to seven states. We spoke with officials

from AAMVA and its contractors and Arizona and Virginia about the

proposed fee structure to recover NMVTIS operational costs in addition to

their development costs for the system. These state officials were selected

because they were in different stages of developing the capability of

interfacing with NMVTIS.

To identify the expected benefits of NMVTIS and potential barriers to

achieving those benefits, we contacted officials from Justice, the FBI,

AAMVA, and the states. These officials provided us with their views on the

benefits to be derived from the system’s implementation and their

individual perspectives on barriers that may prevent NMVTIS from

realizing these benefits.
Appendix I

Objectives, Scope, and Methodology

Page 19 GAO/GGD-99-132 National Motor Vehicle Title Information System

We surveyed officials in the 50 states and the District of Columbia to

obtain their views on NMVTIS-related issues. These officials were

responsible for the titling of motor vehicles in their states. The survey

addressed the states’ (1) willingness to participate in NMVTIS, ability to

implement NMVTIS, and current titling capabilities; (2) expected costs; (3)

expected benefits of the system; and (4) barriers affecting states’ decisions

to join the system. We received responses from the 7 participating states

and from 40 of the 44 nonparticipating states.

We conducted our work between September 1998 and June 1999 in

accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from Justice and AAMVA

officials. Their comments are discussed near the end of the letter.
Page 20 GAO/GGD-99-132 National Motor Vehicle Title Information System
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