The Alaska Railroad:

Its Management Is Being Improved, Its Future Needs To Be Decided

CED-78-137: Published: Jul 27, 1978. Publicly Released: Jul 27, 1978.

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The federal government has owned and operated the Alaska Railroad (ARR) since 1923. ARR played an important role in developing Alaska and in meeting national defense needs; it has become an integral and essential part of Alaska's transportation system. The environment, in which ARR now operates, changed considerably since 1923, however, and competing transportation modes have grown rapidly.

Because it operates in a competitive environment, the ability of ARR to attract customers is essential. ARR had management weaknesses, including no overall marketing plan, a tariff structure which did not ensure that it could meet costs and reinvestment needs, and unreasonably low real estate rental rates. ARR did not have an adequate system of internal controls; as a result, the potential for improper financial transactions existed; potential operating revenues were lost; and property and materials were not adequately protected. Financial management procedures and practices were inadequate, resulting in inaccurate and unreliable accounting data. Pay scales were unreasonably high in relation to other federal agencies in Alaska.

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