Why Not a WPA for the automakers?

Right now US automakers are hurting for two reasons; people are not buying new cars and the ones who have are defaulting on their payments. Banks are afraid to lend due to credit uncertainities. The government would like to solve both problems, so why not create a bridge to allow banks to lend and makers to make?

The problem: Federal agencies spend approximately $1.7 billion annually to operate a fleet of about 387,000 vehicles. GAO found that many federal agencies could not justify the number of vehicles they owned given what they needed to meet their mission requirements. (1)

Why not have the government initiate a project with automakers - to build green cars to replace the entire fleet with 150,000 new low-footprint cars. The requirements could be basic, like:
  1. seats six adults or four adults + 500 lbs. cargo
  2. gets at least 50 mpg and has at least 300 mile range @ 60 mph
  3. climb 3% grade with full load
  4. pass crash tests
  5. can be constructed 100% in USA for less than $10000 in production run

Other than that, can be ANYTHING - hybrid, fuel cell, solar, etc.

Give the automakers $10 million each for a design. The designs can be scored by a consortium of random selections from a pool of engineering/production/marketing teams from foreign auto makers, with the top bid getting a 75,000 vehicle order, the second-best getting a 50,000 order and the third-best getting a 25,000 vehicle order.

FG can award contract to each automaker based on score for a run of vehicles which FG will use to replace federal fleet. Vehicles will be purchased at 5% markup - $15,000 each. THe government underwrites loans from the banks to the automakers at 2.25% and in return the banks get a 2.25% interest rate, guaranteed and the automakers get to retool their plants, rebuild their workforce, build a relevant car and provide a basis for mass produciton of eco-friendly automobiles. The remaining .5% of the loan difference will be used to pay for the scoring and help defray the costs of retiring the current GSA fleet.

I know, big idea, I'm sure there are a lot of flaws. But isn't something like this better than  simply wiring money to the banks and automakers?