Commuter rail is an important part of the transportation system in many cities and regions in our country, providing more than 420 million passenger trips in 2005. Although several of the largest commuter rail agencies hire their own employees, many agencies contract with other companies, including Amtrak, freight railroads, and private rail operators, to provide services that are critical to running the agencies' trains. These contracted services include providing crews to operate trains (train operations); maintenance of equipment (MOE), including maintenance of train cars and locomotives; dispatching train traffic; and maintenance of way (MOW), which involves maintaining the track, signals, and other track infrastructure. Commuter rail agencies can obtain these services by opening contracts to competition or through noncompetitive negotiations with a service provider. Congress asked us to provide information on the service arrangements between commuter rail agencies and other companies. Accordingly, we addressed the following questions: (1) How many currently active commuter rail service contracts were obtained through competitive and noncompetitive processes? (2) What differences, if any, are there between competitively and noncompetitively negotiated contracts?

Fifteen of the 28 active commuter rail service contracts were obtained through competitive processes. As of July 1, 2006, Herzog, a private rail operator headquartered in Missouri, held 7 of the competitively procured contracts. Amtrak held 2 of the competitively procured contracts--including a turnkey service for Caltrain, a commuter rail service linking San Francisco and San Jose, under which Amtrak provides services critical to running Caltrain's commuter service, as well as operations at several of Caltrain's passenger stations. The remaining 6 contracts were spread among six other private transportation companies. The other 13 contracts were negotiated noncompetitively. Amtrak held 5 of these 13 contracts, and three freight railroads--Burlington Northern Santa Fe (BNSF), CSX, and Union Pacific--held 6. The remaining 2 noncompetitive contracts were negotiated between commuter rail agencies that share continuous rights-of-way. According to our analysis, the most notable difference between contracts that were competitively and noncompetitively negotiated was whether the service provider owned the infrastructure that the commuter rail agency was using. Specifically, for all 15 contracts that were negotiated competitively, the service provider did not own the infrastructure used by the commuter rail agency. Rather, in most cases the commuter rail agency or its sister transit agency owned the majority of the infrastructure. In contrast, for 10 of the 13 contracts that were negotiated noncompetitively, the service provider owned the infrastructure used by the commuter rail agency. In two other cases, the service provider was the former owner of the rights-of-way, and the service agreement was established concurrently with the sale of the track. Thus, the service provider currently or previously owned the infrastructure used by the commuter rail agencies for 12 of the 13 noncompetitively negotiated contracts. Another difference between the competitively and noncompetitively negotiated contracts was the types of services included in the contract. Although competitive and noncompetitive contracts were almost equally likely to cover train operations, maintenance of equipment, and maintenance of way, the noncompetitive contracts were much more likely to include dispatching--an important infrastructure-related service that allows the provider to control train traffic on the rights-of-way.