Amtrak:

Limited Income From the Revenue Enhancement Program

RCED-90-76: Published: Feb 1, 1990. Publicly Released: Mar 9, 1990.

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Pursuant to a congressional request, GAO reviewed the National Railroad Passenger Corporation's (Amtrak) Revenue Enhancement Program, which Amtrak used to generate income by competing with the private sector in order to reduce federal subsidies, focusing on: (1) the impact of Amtrak's revenue enhancement activities on reducing the federal subsidy; and (2) whether Amtrak competed fairly when bidding on a 1988 rail welding contract.

GAO found that: (1) although Amtrak generated net income of $140.9 million between 1984 and 1988, that did not substantially reduce Amtrak's $3-billion federal subsidy; (2) Amtrak's revenue enhancement activities would not greatly reduce the need for federal subsidies, since it generated the revenues from leases that would expire by 2004, the maintenance facilities that it could use for mass transit passenger car assembly were at or near capacity, and competition outside the Northeast corridor was limited because of high transportation costs; (3) Amtrak did not provide Congress with detailed financial information concerning current and planned revenue enhancement projects and their contribution to total projected revenue; and (4) it was unclear whether Amtrak competed fairly for the track welding contract, because it used outdated cost data, its profit margin was lower than customary, and it did not properly segregate and assign all contract costs.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Vice President for Corporate Development, Amtrak, stated that Amtrak disagreed with the need to periodically provide Congress with financial information because, as reflected in the report, Amtrak keeps the oversight committees apprised of its activities. Because Amtrak does not intend to take action, GAO is closing the recommendation.

    Recommendation: The President of Amtrak should periodically provide Congress with financial information on actual and projected results of revenue enhancement activities.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

  2. Status: Closed - Not Implemented

    Comments: According to the Vice President for Corporate Development, Amtrak's position on this issue is reflected in the report, that is, Amtrak has the appropriate controls and competed fairly with the private sector. Because Amtrak does not intend to take action, GAO is closing the recommendation.

    Recommendation: The President of Amtrak should implement management controls to ensure that Amtrak competes fairly and on an equal basis with the private sector by using the most up-to-date and accurate cost data in developing bids and subsequently fully assign costs after contracts are awarded.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

 

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