Intercity Passenger Rail:

Amtrak Will Continue to Have Difficulty Controlling Its Costs and Meeting Capital Needs

RCED-00-138: Published: May 31, 2000. Publicly Released: Jun 19, 2000.

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Pursuant to a congressional request, GAO reviewed the National Railroad Passenger Corporation's (Amtrak) costs and capital investment needs, focusing on: (1) changes since 1995 in Amtrak's operating costs, including labor costs, payments to freight railroads to access their track and keep Amtrak trains on time, interest on commercial debt, the projected changes over the next five years, and Amtrak's plans to address these costs; (2) Amtrak's short- and long-term capital investment requirements, including investments to address "state of good repair" issues and investments in its progressive overhaul program and Northeast Corridor high-speed rail program; and (3) the availability of federal and nonfederal funds for Amtrak's capital investments.

GAO noted that: (1) Amtrak's operating costs have increased since 1995, and future increases can be expected; (2) costs in three areas--labor, interest on commercial debt, and payments to other railroads to access track and keep Amtrak's trains on time--have all contributed to these increases; (3) Amtrak has attempted to control costs; (4) however, while its performance has improved in recent years, from 1995 to 1999, Amtrak's operating costs were, in total, about $150 million (in nominal dollars) more than planned; (5) Amtrak has no measures of labor productivity for its lines of business, such as intercity passenger service and commuter service, that could help it better manage its labor costs; (6) because future cost increases can be expected, it will be critical for Amtrak to achieve the revenue projections for such things as its high-speed rail program on the Northeast Corridor; (7) GAO estimates Amtrak has short- and long-term capital investment needs totalling about $9.1 billion through 2015; (8) these needs include safety improvements on tunnels and bridges on the Northeast Corridor and restoration of the Northeast Corridor to a condition that requires only routine maintenance, among other things; (9) Amtrak will also have other capital investment needs for which it has not yet developed cost estimates; (10) finding the financial resources to meet these needs will be difficult since Amtrak's identified capital investment needs are expected to exceed available federal capital funds by nearly $2 billion over the next 5 years; (11) Amtrak expects to share the cost for some infrastructure investments with other railroads and will have to look increasingly to nonfederal sources, such as states, to obtain capital funds; (12) compounding the potential funding shortfall is the lack of a multiyear capital plan, which Amtrak has not prepared since 1997; and (13) development of such a plan will be critical in Amtrak's attempt to address its capital investment needs.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In May 2004, the President of Amtrak indicated that shortly after his arrival at Amtrak in May 2002, he established methods to measure labor performance and instituted benchmarks for such performance. However, there is no evidence that Amtrak has established measures of labor productivity for its different lines of business or benchmarks against which such measures can be assessed. Amtrak's Monthly Performance Reports include information on the financial and workforce status of each department (such as Mechanical) as well as the status of departmental goals and objectives. But there is no evidence of labor productivity measures or benchmarks. Similarly, Amtrak's strategic plans identify the need for workforce and work rule improvements but there is no discussion or identification of productivity measures or benchmarks that directly measure resource inputs for Amtrak's different lines of business (or departments as the case may be) with corresponding outputs. Finally, GAO has had repeated discussions with Amtrak over the last 4 years about development of labor productivity measures and benchmarks. Although Amtrak has said they would develop these, they have taken no steps to do so. Instead, in recent years Amtrak has decided to focus on financial and headcount information, not productivity, to measure its performance. Consequently, the intent of this recommendation has not been achieved.

    Recommendation: To ensure Amtrak efficiently manages its workforce, the President of Amtrak should develop measures of labor productivity for its different lines of business. These measures should directly measure the resource inputs of these business lines with the corresponding outputs. Development of these measures should also include the establishment of benchmarks against which productivity changes can be assessed.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

  2. Status: Closed - Implemented

    Comments: In February 2001, Amtrak released a long-term capital plan as part of its annual strategic business plan. The capital plan is based on Amtrak's comprehensive, long-term capital needs assessment for intercity passenger rail. The plan identifies Amtrak's capital investment needs over the next 20 years, prioritizes areas for federal investment, categorizes investments into areas of benefits, and estimates the share to be contributed by federal and non-federal sources. Amtrak's actions substantially meet the intent of the recommendation.

    Recommendation: To better ensure that Amtrak fully identifies and adequately plans for its capital investment needs, the President of Amtrak should expeditiously adopt a multiyear capital spending plan that: (1) fully identifies the capital investment needs of Amtrak over a period of not less than 5 years; (2) prioritizes these needs according to corporate goals and strategies; (3) establishes specific measurable benefits to be achieved from these investments; and (4) identifies the expected funding sources available to finance the capital investment needs.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

 

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