Conrail Needs To Further Improve Inventory Control and Management

Highlights

Since 1976 Congress has provided $3.3 billion in Federal funds to Consolidated Rail Corporation, commonly known as Conrail. Of this, about $1.4 billion has been spent for track rehabilitation. The Regional Rail Reorganization Act of 1973 provides that GAO should keep Congress informed of the security of Federal funds invested in Conrail. GAO evaluated the physical and management controls Conrail has for its maintenance-of-way losses, thefts, or unauthorized use that could occur without detection. Maintenance-of-way inventory consists of items required to maintain and rehabilitate tracks, bridges, and buildings, as well as items to maintain and repair maintenance-of-way work equipment.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should change the organizational structure so that users and custodians of maintenance-of-way materials are not in the same department.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should assess the physical security of the individual inventory stores and make improvements such as installing fencing and lighting if needed and where deemed economically feasible. Also, access to inventory stores should be limited to authorized persons.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should instruct Conrail personnel to comply with existing procedures requiring that purchase orders be on hand at inventory stores when purchased materials and supplies are received.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should establish a procedure for the transfer of inventory items from one Conrail location to another, requiring that the receiving store verify all items received against accompanying transfer documents and prepare a receiving report for input into the material, accounting and purchasing system.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should require that open purchase orders be monitored and that the need for purchase orders that are outstanding for a considerable period beyond the requested delivery dates be reevaluated.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should revise procedures to provide for the investigation and evaluation of a representative number of gross, rather than net, physical inventory variances at each store. The procedures should provide guidance on the dollar values of variances to be investigated and should also require that the causes be identified and reported to top management together with recommendations for corrective action.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should maintain stock status inventory records for each inventory store location.	Closed Please call 202/512-6100 for additional information.
United States Railway Association	The Chairman and Chief Executive Officer of Conrail should establish and monitor reasonable inventory record accuracy standards based on the percentage of gross physical inventory variance.	Closed Please call 202/512-6100 for additional information.

See All 8 Recommendations

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Office of Public Affairs

Chuck Young

Managing Director

youngc1@gao.gov

(202) 512-4800

Topics

Government Operations

Equipment maintenanceInventory control systemsProperty and supply managementRailroad transportation operationsSystems designRailroad bridgesInventoryRailInventory controlFederal funds