Amtrak's Incentive Contracts with Railroads:

Considerable Cost, Few Benefits

CED-77-67: Published: Jun 8, 1977. Publicly Released: Jun 8, 1977.

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The $34 million that Amtrak has spent on incentive contracts with 10 railroads since July 1974 has had little effect on performance.

The first incentive agreements included three provisions to improve ontime performance: an incentive for adherence to schedules; an incentive for making up lost time; and a penalty for excessive delay. However, ontime performance has improved mainly because of a more liberal definition of "ontime" and because of loosened schedules, not because of the incentives. Incentives for keeping equipment operable and available have had virtually no effect on improving the quality of equipment maintenance. Amtrak recently signed new incentive contracts with three railroads and has reached tentative agreements with five others. Although Amtrak has reduced the running time of many trains and increased the percentage of trains which must be ontime before incentive payments are made, some problems still exist.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: In future agreements with railroads, Amtrak should penalize railroads for performance below the baseline; use Amtrak staff for reporting arrival times; retain and enforce the penalty for unclean cars; strengthen the preventive maintenance provision to reward railroads for doing more work than expected and penalize them for not doing what is expected; consider what a service should cost, as well as actual historical costs, in renegotiating flat rates; and measure ontime performance at major intermediate points, especially for schedules that are not constructed properly.

    Agency Affected:

 

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