Federal highway safety regulators need to make major improvements in collecting and analyzing data about potential auto defects to avoid another debacle like the Firestone tire episode, the Transportation Department's internal watchdog unit said yesterday.

A report by the department inspector general's office faulted the National Highway Traffic Safety Administration for using what it called a "seriously flawed system" of incomplete and often inaccurate data in deciding whether to open an investigation. Hundreds of people were killed and injured before 10 million Firestone tires were recalled starting in August 2000.

The report also questioned whether the agency is equipped to carry out a new law passed in response to the Firestone recall. The report said NHTSA "still faces several challenges in fully implementing [the new law] and improving its ability to identify potential safety defects."

It noted, for example, that the agency's Office of Defects Investigation (ODI) -- which launches investigations that can lead to safety recalls -- receives about 34,000 complaints a year, but auto manufacturers receive many more. In one case, the report said, NHTSA received 32 complaints about a transmission failure, while the manufacturer received 1,411.

In some cases, the agency declined to open an investigation despite notices of serious injuries, the report said. In contrast, it did open probes involving similar problems even though no serious injuries were reported.

The agency has agreed to make some key changes in response to the inspector general's investigation, including developing a new defect-analysis program and a new decision-making procedure to better identify safety defects. The new law gives NHTSA a budget increase to build a better database and early warning system, and it requires manufacturers to pass consumer complaints on to the agency.

NHTSA Administrator Jeffrey W. Runge defended the agency's past actions. "We believe that the process currently used by the ODI to identify potential safety defects . . . [has] worked well," he wrote to the inspector general. "We do believe that very few, if any significant safety defects have escaped detection."

Runge's comments drew a sharp dissent from the inspector general's office. "We strongly disagree with this statement," the report said. "The Firestone tire incident . . . and the case examples in our report clearly illustrate that ODI's process and procedures need major improvements."

The report echoes criticism safety advocates have made for years about weaknesses at NHTSA. Clarence M. Ditlow, executive director of the Center for Auto Safety, said the report "shows the ODI program over the years has been at best, haphazard." He added: "We're glad someone looked under the hood, and we need continued oversight to bring NHTSA up to speed on auto defects."

The year-long review was requested by Sen. John McCain (R-Ariz), the ranking minority member of the Senate Commerce Committee, which held hearings on the Firestone tire failures. McCain was out of the country yesterday.

Ken Johnson, spokesman for Rep. W.J. "Billy" Tauzin (R-La.), chairman of the House Commerce Committee, which also held hearings, said "the report verified our suspicions that NHTSA's process for reviewing data was fundamentally flawed."

"Hopefully the [new law] will help overcome these failings, but clearly the agency has a lot of work to do in a short period of time," Johnson said. The committee "will call NHTSA officials in later this year for an update," he said.

Even though the new law provides new resources to NHTSA, the agency has already fallen behind in drafting new regulations, and the new information system for identifying defects "is at risk because of poor project planning and management," the report said.

It expressed concern about NHTSA's refusal to update and correct its current database, saying it was filled with errors. For example, it noted several complaints where consumers described brake failures that led to accidents where the air bags failed to deploy. Only the air bags were recorded as problems in the database.

NHTSA said it would be too time-consuming and burdensome to correct the existing data. The report said the result will be the continuation of "a seriously flawed system."

The agency also may miss some key hazards, the report added. It noted that there is no requirement that senior management be immediately notified of any complaint involving a death or serious injury.

The report also noted that there is no follow-up or review when investigations are not launched, even if complaints increase. For example, the agency received six complaints over a four-month period about air bags failing to deploy in frontal crashes of a 1998-model sedan. All the complaints noted injuries, including one where the driver was seriously hurt. But no investigation was opened even though one was recommended by the defects-analysis staff.

A year later, the number of complaints about the problem quadrupled to 24. Even then, an investigation wasn't begun, the report said.

The Office of Defects Investigation has little time to review consumer complaints to determine whether there is a problem that needs to be forwarded for prompt consideration, the report noted. Each staff member reviews an average of 200 complaints a week, giving them about 12 minutes to search the database for similar concerns, investigations and recalls.