Summary
Amtrak has struggled since its inception to earn sufficient revenues and operate efficiently. In June 2002, Amtrak's new president began major efforts to improve efficiency. However, the financial condition of the company remains precarious, requiring a federal subsidy of more than $1 billion annually. Capital backlogs are now about $6 billion, with over 60 percent being attributable to its mainstay Northeast Corridor service. GAO reviewed Amtrak's (1) strategic planning, (2) financial reporting and financial management practices, (3) cost containment strategies, (4) acquisition management, and (5) accountability and oversight.
Amtrak's basic business systems need to be strengthened to help achieve financial stability and meet future operating challenges. Recently, Amtrak's management has taken positive steps to instill some discipline and control over operations. However, fundamental improvements beyond these efforts are needed to better measure and monitor performance, develop and maintain financial controls, control costs, acquire goods and services, and be held accountable for results. Several key themes emerged across all five areas GAO reviewed. Amtrak lacks a meaningful strategic plan that provides a clear mission and measurable corporatewide goals, strategies, and outcomes to guide the organization. Also absent is a comprehensive strategic planning process, characteristic of leading organizations GAO has studied. Also, while Amtrak has recently taken steps to improve its acquisition function, GAO found that some major departments independently made large purchases and did not always adhere to Amtrak's procurement policies and procedures. Amtrak lacks adequate data on what it spends on goods and services, preventing it from identifying opportunities to leverage buying power and potentially reduce costs. Similarly, while Amtrak has recently reduced costs, revenues are declining faster than costs, leading to operating losses exceeding $1 billion annually. These losses are projected to grow by 40 percent within 4 years; no effective corporatewide cost containment strategy exists to address them. Financial reporting and financial management practices are weak in several areas. Financial information and cost data for key operations, while improved, remain limited and often unreliable. For example, Amtrak's on-board food and beverage service lost over $160 million for fiscal years 2002 and 2003. Amtrak's poor management and enforcement of its food and beverage contract (an outside contractor is responsible for procuring and distributing food and beverages for most of Amtrak's trains) may have contributed to this loss. Regarding financial reporting, GAO found that Amtrak had omitted or misallocated key expenses in several areas, substantially understating operating expenses in reports that managers use to assess performance. Similarly, Amtrak has not developed sufficient cost information to target potential areas to cut costs, accurately measure performance, and demonstrate efficiency. Developing transparency, accountability, and oversight is critical for achieving operational success. Since Amtrak is neither a publicly traded private corporation nor a public entity, it is not subject to many of the mechanisms that provide accountability for results. Mechanisms that do apply, such as oversight by the board of directors and the Federal Railroad Administration, are limited or have not been implemented effectively. Current congressional review of Amtrak offers an opportunity for addressing these transparency and accountability issues.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Susan A. Fleming
Government Accountability Office: Physical Infrastructure
(202) 512-8984
Matters for Congressional Consideration
Recommendation: As part of the deliberation about the future of Amtrak and intercity passenger rail, Congress may wish to consider establishing a national policy for intercity passenger rail and determining the appropriate role for Amtrak by ensuring that reauthorization or reform legislation (1) establishes clear, nonconflicting goals; (2) establishes the roles of both the federal and state governments as well as private entities; (3) establishes funding approaches that focus on and provide incentives for results and accountability; and (4) provides that the strategies developed address the diverse stakeholder interests and limit unintended consequences.
Status: Not Implemented
Comments: On October 16, 2008, the Passenger Rail Investment and Improvement Act of 2008 (P.L. 110-432) was enacted into law. The law provides Amtrak with about $2 billion per year for necessary operating and capital expenses, provides additional funds for states to work with Amtrak to develop corridors for passenger rail service, increases internal controls over Amtrak's financial reporting and performance, and calls for the Federal Railroad Administration to prepare a national rail plan. The law also establishes a High Speed Rail Corridor Development program that allows states and the private sector to develop high speed rail service on various corridors in the U.S. Although this law increases Amtrak funding and increases the role of states in passenger rail decision making, it is not clear that it establishes a national policy for intercity passenger rail that addresses the 4 elements specified in the recommendation. The law does not necessarily establish a national intercity passenger rail policy that clearly establishes goals, objectives, and outcomes, roles of the federal government and other stakeholders that are not conflicting and relate to the goals and objectives, or provide strategies addressing diverse stakeholder interests. The current structure of intercity passenger rail is retained without identifying its goals, objectives, and outcomes, nor clearly identifies the federal role in accomplishing these.
Recommendations for Executive Action
Recommendation: To create a strategic planning and performance-based management approach and to build on the strategic planning efforts already under way at Amtrak, Amtrak's president should prepare a comprehensive strategic plan with a clearly defined mission, organizational goals and objectives that encompass all of Amtrak's activities, and strategies or action plans to achieve those goals.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: Amtrak has still not completed a new strategic plan for fiscal year 2008 or 2009 and the president of Amtrak resigned in November 2008. Although an interim president has been named, it is not likely a new plan or corporate goals will be prepared before a permanent president is selected. Update as of 9/19/08: We continue to seek updated information from Amtrak on this recommendation. Amtrak does not have a mission statement, corporate goals, or strategic plan for fiscal year 2008. In March 2008, Amtrak senior management and Board of Directors began efforts to refocus its strategic plan and develop a new strategic vision, but that effort has not yet been completed. Update as of 8/27/07: We are still seeking information about this recommendation. Beginning in late 2006 there was a nearly complete overhaul of top management at Amtrak. Consequently, no strategic plan has been issued to date (August 2007).
Recommendation: To create a strategic planning and performance-based management approach and to build on the strategic planning efforts already under way at Amtrak, Amtrak's president should establish annual performance goals that tie to the mission and corporate goals.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: Amtrak has not completed a new strategic plan, established corporate goals, or developed a mission statement. We will continue to seek update information on this recommendation. Update as of 9/19/08: We continue to seek updated information from Amtrak on this recommendation. Amtrak does not have a mission statement, corporate goals, or strategic plan for fiscal year 2008. In March 2008, Amtrak senior management and Board of Directors began efforts to refocus its strategic plan and develop a new strategic vision, but that effort has not yet been completed. Update as of 8/29/07: We are in the process of obtaining information about this recommendation and expect to receive update information in late 2007. Amtrak had a near complete overhaul of its top management in 2006 and 2007.
Recommendation: To create a strategic planning and performance-based management approach and to build on the strategic planning efforts already under way at Amtrak, Amtrak's president should develop an incentive-based performance management system that ensures responsibility for goals is clearly articulated at all levels of the organization.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: This status is the same and we will continue to seek information about this recommendation. Update as of 9/19/08: Over the past year, Amtrak has made progress in developing a new performance-based management system. Amtrak established a timetable for implementing the new system and prepared an incentive pay plan for Board approval in October 2008. We will continue to work with Amtrak to get updated information on the status of this system. Update as of 8/29/07: We are in the process of obtaining information regarding this recommendation. Amtrak has been interested in establishing a performance-based management system but the overhaul of management staff in 2006-2007 may have delayed this effort.
Recommendation: To create a strategic planning and performance-based management approach and to build on the strategic planning efforts already under way at Amtrak, Amtrak's president should assess and develop the data systems and processes necessary to monitor, evaluate, and report--both internally and externally--on progress toward Amtrak's mission and strategic and annual performance goals.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. However, Amtrak's president resigned in November 2008. Although an interim president has been named, it is not likely elements of this recommendation will be completed until a permanent successor is named. Update as of 9/19/08: In March 2008, Amtrak senior management and Board of Directors began efforts to refocus its strategic plan and develop a new strategic vision, but that effort has not yet been completed. Therefore, this recommendation cannot be implemented until a strategic plan, goals, and objectives are in place. We will continue to work with Amtrak to obtain updated information on this recommendation. Update as of 8/29/07: No strategic plan with related goals and objectives has been established as of August 2007. Consequently, this recommendation cannot yet be implemented. We will work with Amtrak to obtain updated information on this recommendation.
Recommendation: To ensure that Amtrak's financial reporting and financial management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation should direct the Federal Railroad Administrator to require Amtrak to submit a plan, which includes specific actions to be taken, anticipated outcomes, and completion dates, to improve its financial reporting and financial management practices.
Agency Affected: Department of Transportation
Status: In process
Comments: We are in process of evaluating information provided by the Federal Railroad Administration in September 2008 about this recommendation.
Recommendation: To ensure that Amtrak's financial reporting and financial management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation should direct the Federal Railroad Administrator to review and provide Amtrak with feedback and direction, as necessary, on this plan to ensure that the most effective approach(s) to improving financial reporting and financial management practices are implemented.
Agency Affected: Department of Transportation
Status: In process
Comments: We are in the process of evaluating information provided by FRA in September 2008 related to this recommendation.
Recommendation: To ensure that Amtrak's financial reporting and financial management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation should direct the Federal Railroad Administrator to monitor Amtrak's performance under the plan and report, at least annually, to Congress on progress being made by Amtrak regarding improvements of its financial reporting and financial management practices--this report should identify any specific actions either Amtrak or Congress should take to facilitate such improvements.
Agency Affected: Department of Transportation
Status: In process
Comments: We are in the process of evaluating information provided by FRA in September 2008 regarding this recommendation.
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should add the following information to monthly performance reports: (1) food and beverage services: separate revenue and expense information, gross profit analysis, information on the cost of meals, and other metrics basic to a food service operation; (2) employee benefits: cost trends, changes in the components of benefit costs, and initiatives to manage these costs; (3) each line of business: components of key expense line items and functional activities (such as salaries and benefits), trends in key expense components, differences in actual versus budgeted results, and appropriate performance metrics (such as revenue per passenger mile and expense per passenger mile); and (4) each train route in the route performance information (RPI): comparative expense and net profitability or loss, amounts for depreciation expense, and amounts for other components of expenses (such as salaries and benefits).
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: We are continuing to obtain information from Amtrak and evaluating information related to this recommendation received from both Amtrak and FRA. We are in the process of obtaining updated information regarding this recommendation. Amtrak had a substantial turnover of management staff in 2006 and 2007 and this has not been a priority.
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should perform a comprehensive risk assessment of financial reporting processes that support preparation of monthly performance reports and the RPI, to include determining areas of vulnerability, implementing appropriate compensating and mitigating internal controls, and ongoing monitoring to ensure compliance.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We are continuing to seek information from Amtrak and evaluating information provided by Amtrak over the last several months. Amtrak is in the midst of a major overhaul of its financial accounting and reporting system which is expected to take years to complete. RJ 12/15/08. We are in the process of obtaining information about this recommendation as of August 2007. A substantial turnover of management staff in recent years has lowered the priority of this recommendation. RAJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should document policies and procedures related to controlling the information in the monthly performance reports, including the RPI. The policies and procedures should cover how expenses are allocated to Amtrak's routes, as well as specific guidance on documenting the justification and authorization of changes made to allocation methods.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We continue to seek information from and evaluate information related to this recommendation from Amtrak. Amtrak is in the midst of a major overhaul of its accounting and financial reporting system. RJ 12/15/08. We are in the process of obtaining information about this recommendation. A substantial turnover of management staff has delayed providing updated information. RAJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should allocate accrued postretirement health benefit expenses among Amtrak's lines of business and reflect accrued costs in billings for employee benefits under reimbursable agreements with outside entities. Adjust standard benefit expenses rate on a timely basis.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We continue to seek information from an evaluation received from Amtrak. Amtrak is in the midst of a major overhaul of its accounting and financial reporting system. RJ 12/15/08. We are in the process of obtaining information about this recommendation. A substantial turnover of management staff has delayed providing an update. RAJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should modify existing controls by (1) clearly define all significant terms used in Supplemental Executive Retirement Plan (SERP) determinations (such terms include management committee member, senior staff employee, compensation, financial targets, and performance goals) so that they can be consistently applied throughout the process; and (2) reconsider the timing of management proposals for SERP awards to ensure that decisions are based on information from audited financial statements.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: We continue to seek from and evaluate information received from Amtrak related to this recommendation. Amtrak is in the midst of a major overhaul of its accounting and financial reporting system that will not be completed for several years. RJ 12/15/08. As of September 30, 2006 Amtrak has incorporated this project in a new Retirement Benefits Review initiative and plans to update plan documents to define such terms. Amtrak will reconsider the timing of SERP awards. We are in the process of obtaining updated information. RJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should develop a comprehensive action plan for immediately implementing preventive controls to enhance the reliability of financial data and address the reportable condition over accounting for capital assets in the most recent reports and letters of comment from the independent public accountant.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We continue to seek information from and evaluate information received from Amtrak regarding this recommendation. Amtrak is in the midst of a major overhaul of its accounting and financial management system. RJ 12/15/08. As of September 30, 2006, Amtrak in the short-term has developed and implemented back-end controls that mitigate the lack of an integrated financial system. Long-term, Amtrak has been taking steps since April 2004 toward implementing an integrated financial system. Recently, Amtrak has developed with an outside consultant, a comprehensive plan to implement an integrated financial system beginning in Fiscal Year 2006. A Request for Proposals has been sent to vendors for SAP system implementation process. Implementation activity expected to begin in Jan/Feb 2007. As of August 2007, we are awaiting updated information on this recommendation. RJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should engage an independent public accountant to provide (1) special services as necessary to provide assurance over compliance with federal regulations concerning overhead rates developed and applied to recover indirect costs associated with work performed for outside parties and (2) review-level attestation work on Amtrak's quarterly financial statements.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: We continue to seek information from and evaluate information received from Amtrak regarding this recommendation. Amtrak is in the midst of a major overhaul of its accounting and financial reporting system. RJ 12/15/08. We are in the process of obtaining information about this recommendation. A substantial turnover of management staff in 2006-2007 has made delayed providing updated information. RJ 8/29/07
Recommendation: To improve Amtrak's efforts in addressing financial management challenges and better support management decision making, the president of Amtrak should continue to have annual audits of its financial statements performed under U.S. generally accepted government auditing standards (GAGAS) and, effective beginning with its fiscal year 2004 financial statement audit, make publicly available the auditor reports prepared under GAGAS reporting standards for financial audits, including those on internal control and compliance with laws, regulations, and provisions of contracts and grants.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We continue to seek information from and evaluate information received from Amtrak regarding this recommendation. Amtrak is in the midst of a major overhaul of its accounting and financial report system. RJ 12/15/08. We are in the process of obtaining information regarding this recommendation. A substantial turnover of management staff in 2006-2007 has delayed obtaining new information regarding this recommendation. RJ 8/29/07
Recommendation: To ensure that Amtrak can better meet the challenge of increasing its efficiency and reducing its operating costs, the president of Amtrak should comprehensively assess Amtrak's cost structure and the performance of its assets.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. The Strategic Asset Management Plan is expected to be completed in fiscal year 2009. RJ 12/15/08. According to FRA, Amtrak is developing a Managerial Cost Accounting Plan, whose major elements include a strategic asset management plan, an activity analysis project and the replacement of the Route Profitability System. The Plan will fully integrate Amtrak's financial, supply chain, and material and asset management systems. In September 2008, Amtrak issued a contract to a consultant to assist in the development of this system. (GMH 10/20/08) In response to this recommendation, Amtrak sent a copy of its draft NEC master plan. This report is intended to produce information for policy discussion among NEC stakeholders. It contains a section on Amtrak's NEC operational costs and major NEC capital projects; however it discusses them in a general and summary fashion with not a lot of details. In addition, the report does not address Amtrak's entire cost structure nor does it assess the performance of all of its assets, which include more than the NEC. In response to a GAO recommendation from another report (GAO-06-470), Amtrak officials summarized the work that the Amtrak Finance department is conducting with the FRA's Volpe Center to develop a new performance tracking system that will utilize 34 cost centers to allocate then aggregate Amtrak's costs into related cost categories. According to Amtrak, this system will replace the Route Performance System and allocate revenues as well. Testing of this system will occur into the first fiscal quarter of FY09. More follow-up is needed to determine what business lines and assets are included in this system, how revenues and costs are calculated and how this information will be used by Amtrak. GMH 09/18/08. We are in the process of obtaining updated information about this recommendation as of August 2007. RJ 8/29/07 Amtrak's response: Efforts are underway to assess cost structure and improve utilization of Amtrak fleet and infrastructure assets, including tracking of performance against key measures such as fleet reliability and availability. Current status: Requirements defined, fleet optimization model and Northeast Corridor infrastructure master plan (including asset condition assessment) under development, performance tracking under development as part of fleet plan and dashboard. (09/06)
Recommendation: To ensure that Amtrak can better meet the challenge of increasing its efficiency and reducing its operating costs, the president of Amtrak should establish efficiency and unit cost measures with clear inputs to benchmark individual asset and corporate productivity, which will demonstrate efficient use of Amtrak's resources.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We will continue to seek information about this recommendation. RJ 12/15/08. According to FRA, Amtrak is continuing to develop measures of corporate performance and outcomes in conjunction with FRA on-site personnel. According to Amtrak's grant agreement with FRA, these measures must be posted on Amtrak's website and addressed through Amtrak's monthly performance report. These are overall corporate measures (such as ticket yield and revenue per seat mile) and do not show individual asset performance or unit cost metrics which could help Amtrak determine where opportunities to lower its costs are. (GMH 10/20/08) Amtrak's updated response: Amtrak Finance department officials sent a March 4, 2008, memo documenting personnel shifts to facilitate Amtrak's strategic planning under its relatively new president and an August 5, 2008, memo documenting the formulation of a business strategy working group to develop Amtrak's NEC, State Corridor, and Long Distance business strategies and related plans. These documents do not mention any formulation of efficiency and unit cost measures with clear inputs to benchmark individual asset or corporate productivity nor do they link any of the working group's efforts toward developing these measures. In previous responses, Amtrak officials indicated that a set of performance metrics had been developed and was sent to Amtrak's Board of Directors for approval. Amtrak Finance has since stated that these metrics were never formally adopted by Amtrak's Board and were discontinued. Amtrak does report some measures of corporate productivity in its Annual Statistical Report as part of its Annual report, such as system wide load factor, ticket yield, total revenue per seat mile, total expense per seat mile, core revenue per seat mile and core expense per seat mile. GMH 09/18/08. Amtrak's response: Efforts are underway to develop key performance metrics, unit costs and external benchmarks, consistent with recommendations in Amtrak's Strategic Reform Initiatives (SRI) plan. Key corporate level metrics have been defined. Implementation of corporate dashboard to track metrics underway. Current Status: Key corporate level metrics have been defined. Implementation of corporate dashboard to track metrics is underway. We are in the process of obtaining updated information regarding this recommendation. RJ (08/07)
Recommendation: To ensure that Amtrak can better meet the challenge of increasing its efficiency and reducing its operating costs, the president of Amtrak should develop a cost containment strategy that uses these new cost measures and guides the cost reduction actions across all departments.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update at of 12/15/08: We will continue to monitor implementation of this recommendation. As in September 2008, it will be 2009 before information will be available to determine the status of this recommendation. RJ 12/15/08. Update: Amtrak has is currently developing revenue and cost metrics by working with FRA's Volpe Center. This system is still under development and will be in testing until at least the end of the first fiscal quarter of FY09. Without these measures, Amtrak cannot address the recommendation to develop a cost containment strategy. GMH 09/18/08 Amtrak's response: Performance metrics, unit costs and external benchmarks are part of broader performance measurement framework, currently in development, that includes among its objectives cost control and improved efficiency and productivity. Preliminary planning is underway to assess the integration of this performance-based framework into budgeting and accounting systems. Current Status: Series of initiatives defined; Project Management Office in place; project managers assigned and schedules being developed; annual targets identified; Amtrak is managing to and tracking these targets. (09/06) We are in the process of obtaining information about this recommendation. A substantial turnover of management staff has delayed providing this update. RJ 8/29/07
Recommendation: To ensure that Amtrak can better meet the challenge of increasing its efficiency and reducing its operating costs, the president of Amtrak should continue the use of and seek more opportunities to use cost containment practices that are widely used in the railroad industry, including a spend analysis of goods and services procured, benchmarking, outsourcing, and efficiency reviews.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. We will continue to seek information about this recommendation. RJ 12/15/08. Amtrak is working on developing the IT infrastructure to provide a comprehensive spend analysis of all inventory, fuel, and service purchases for analysis. No evidence provided for any reviews of benchmarking, outsourcing or efficiency reviews, however. (GMH 10/20/08) Amtrak has not addressed this recommendation. We will follow-up with Amtrak officials. GMH 09/18/08 Amtrak's response: Performance metrics, unit costs and external benchmarks are part of broader performance measurement framework, currently in development, that includes among its objectives cost control and improved efficiency and productivity. Preliminary planning is underway to assess the integration of this performance-based framework into budgeting and accounting systems. Current Status: Noted under the Procurement Section that we would acquire a Spend Management System as part of SAP/Integrated Financial Systems, which is two years down the road. The other metric items are being implemented. Status of specific initiatives described in monthly Board report on Strategic Initiatives. (09/06) We are obtaining updated information about this recommendation as of August 2007. RJ 8/29/07
Recommendation: To ensure that Amtrak's acquisition management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation direct the Federal Railroad Administrator to increase oversight by requiring Amtrak to submit a plan, possibly as part of the company's application for grant funds, identifying the specific actions that will be taken, consistent with the recommendations outlined below, to improve its acquisition management practices.
Agency Affected: Department of Transportation
Status: In process
Comments: According to the FRA, an acquisition plan as called for in the recommendation has been prepared by Amtrak. This plan was approved by Amtrak's Board of Directors in September 2008. At the current time, this plan has not been formally submitted to FRA. We will pursue additional information about this plan, including obtaining a copy and reviewing its contents.
Recommendation: To ensure that Amtrak's acquisition management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation direct the Federal Railroad Administrator to review and provide comments on this plan to Amtrak and work with Amtrak management and staff to develop the most cost-effective approach(es) to improving acquisition management practices. The approach(es) developed should ensure that Amtrak, FRA, and others, as appropriate, have adequate information on which to make business decisions regarding the acquisition of goods and services and the use of federal resources provided to do so.
Agency Affected: Department of Transportation
Status: In process
Comments: We are still seeking information from FRA and Amtrak about this recommendation, particularly as it relates to the acquisition plan prepared by Amtrak. According to FRA, as of September 2008 this plan has not yet been formally submitted to FRA. We do not yet have a copy of this plan and do not know its contents.
Recommendation: To ensure that Amtrak's acquisition management practices support sound business decisions and the efficient and effective use of federal funds provided to Amtrak, the Secretary of Transportation direct the Federal Railroad Administrator to report at least annually to Congress on progress being made by Amtrak regarding improvement of its acquisition management. This report should identify any specific actions either Amtrak or Congress should take to facilitate improvement in acquisition management, particularly improvement in its knowledge and information system and the use of acquisition data in identifying opportunities for cost savings.
Agency Affected: Department of Transportation
Status: In process
Comments: According to FRA, as of September 2008 Amtrak had not submitted its formal acquisition plan to FRA. Consequently, FRA is not able to report to Congress about this plan. We will continue to obtain information about this plan and FRA's monitoring/reporting efforts.
Recommendation: To help improve Amtrak's acquisition function and better promote efficiency, effectiveness, and accountability when acquiring goods and services, Amtrak's president should work with the vice president of procurement to take actions that will address the various issues raised in this chapter. These actions include ensuring that all departments receive information on procurement policies and procedures, similar to the presentations that have already been given to a number of departments, and ensuring that all departments are held accountable for following those policies and procedures.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: Implemented
Comments: Amtrak made presentations to the departments we specified in our recommendations. LFC 12/19/2006
Recommendation: To help improve Amtrak's acquisition function and better promote efficiency, effectiveness, and accountability when acquiring goods and services, Amtrak's president should work with the vice president of procurement to take actions that will address the various issues raised in this chapter. These actions include taking additional action to become more integrated into the planning of all service acquisitions, similar to the actions Amtrak's human resources and labor relations departments are taking with regard to awarding health benefits contracts.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: Implemented
Comments: Amtrak has not addressed this recommendation. LFC 12/19/2006. We are waiting for updated information on this recommendation (8/07). RAJ Procurement now reports to CFO to better align budget, financial management, procurement, and logistics, Procurement also now sets goals, and has implemented inventory controls. LFC 8/20/08
Recommendation: To help improve Amtrak's acquisition function and better promote efficiency, effectiveness, and accountability when acquiring goods and services, Amtrak's president should work with the vice president of procurement to take actions that will address the various issues raised in this chapter. These actions include developing an action plan to better ensure that acquisition policies and procedures are communicated, followed, and enforced. This includes (1) ensuring that user departments required to procure goods and services through the procurement department cannot acquire them independently; (2) ensuring that services are acquired competitively to the maximum extent possible, such as enforcing the requirement to obtain justifications for noncompetitive acquisitions; (3) ensuring that changes increasing the cost of contracts are approved in accordance with current delegation of authority, which requires that approvals are based on the cumulative value of contracts, not the incremental value of change orders; and (4) ensuring the appropriate use of payment requests by enforcing the requirement that payment requests not exceed $5,000 and ensuring that they are not used when a contract and corresponding purchase order are in effect for a particular vendor.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: Implemented
Comments: Amtrak has partially addressed this recommendation. They have taken steps to incorporate justification for non-competitive procurements in their electronic procurement system, eTrax. They have also taken steps to ensure that departments required to go through Procurement do so, and efforts to control the use of payment requests are in process. We disagree with Amtrak's response to our recommendation that Amtrak ensure that changes be approved in accordance with the delegation of authority, which uses the cumulative amount of the contract as the criteria as opposed to the incremental change. Specifically, Amtrak's response is to change the delegation to allow approvals based on the incremental amount. Amtrak's request to change the delegation of authority is still in-process. LFC 12/19/2006. We are in the process of obtaining updated information about this recommendation. RAJ 8/29/07. Amtrak has implemented steps to ensure that user departments do not acquire goods and services independent of the procurement departments, is enforcing the policy to require justifications for sole source procurements, and to ensure the appropriate use of payment requests. LFC 8/20/08.
Recommendation: To help improve Amtrak's acquisition function and better promote efficiency, effectiveness, and accountability when acquiring goods and services, Amtrak's president should work with the vice president of procurement to take actions that will address the various issues raised in this chapter. These actions include, together with the law and finance departments, developing standardized acquisition policies and procedures for acquiring outside legal services to ensure that (1) acquisition of outside legal services is competitive to the maximum extent possible; (2) spending on outside legal services is analyzed to identify opportunities to control and reduce spending; (3) documentation specifying the terms and conditions of the work to be prepared; (4) attorneys completely and consistently review invoices for compliance with Amtrak's billing guidelines; (5) the law department follows Amtrak policy by providing approved invoices to the accounts payable section for payment; and (6) key duties, such as authorizing, reviewing, and receiving payments for outside legal services, are segregated, and that attorneys not be allowed to create and edit payees' names and addresses.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: We will continue to seek information about the other parts of this recommendation. RJ 12/15/08. Amtrak has addressed Item 3 of this recommendation. LFC 8/20/08. Previous updates: We are in the process of obtaining information about this recommendation. A substantial turnover of management staff has delayed this update. RAJ 8/29/07. Amtrak's efforts on this recommendation are on-going. Amtrak has issued a request for proposals for some legal work and has received some responses. Amtrak has also begun using an electronic invoice system that will allow it to analyze its spending. LFC 12/19/2006.
Recommendation: To help improve Amtrak's acquisition function and better promote efficiency, effectiveness, and accountability when acquiring goods and services, Amtrak's president should work with the vice president of procurement to take actions that will address the various issues raised in this chapter. These actions include creating an automated, centralized spend analysis system for capturing the type of reliable and complete spending data needed to identify opportunities to leverage Amtrak's buying power and provide better management and oversight of purchasing activities and suppliers. The system should include features that would (1) provide data on what categories of goods and services are being acquired; how many suppliers are being used for specific categories; and how much is being spent on specific categories, in total and for each user department and with each supplier; and (2) ensure that data are more readily and reliably retrievable on an automated and repeatable basis.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: We are still evaluating information received from Amtrak in September 2008 regarding a planned implementation of the ARIBA spend management system. RJ 12/15/08. Update as of 9/18/08: We are still waiting for information from Amtrak related to this recommendation. RAJ 9/18/08. Previous updates: Amtrak's progress on this recommendation is in process. Amtrak has budgeted the acquisition of the ARIBA spend management system in FY 2007. LFC 12/19/2006. We are in the process of obtaining information about this recommendation. A substantial turnover of management staff has delayed this update. RAJ 8/29/07.
Recommendation: To strengthen the oversight of corporate performance and to increase the accountability of Amtrak's management for achieving the goals and objectives it establishes, and to provide the needed transparency among key internal and external stakeholders, the chairman of Amtrak's board and the board members should develop policies related to the oversight of corporate performance and the specific procedures to be used to implement these policies.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No new strategic plan had been adopted. With the turnover of the president of Amtrak in November 2008 it is uncertain when this plan and any oversight of corporate performance via this plan might be implemented. RJ 12/15/08. As of September 2008, the Amtrak Board of Directors had not adopted resolutions or actions establishing policies and procedures for formal oversight of corporate performance. Amtrak had told us that corporate performance targets had been established and that progress in implementing corporate initiatives was tracked monthly in "action item update" reports submitted to the Board of Directors. However, these action item reports were terminated in January 2008 because a new strategic plan was being developed. A review of an action item update report provided by Amtrak showed it was focused on specific corporate initiatives and not overall corporate performance. We will continue to monitor this recommendation to determine if Amtrak's Board of Directors establishes formal oversight policies and procedures once a new strategic plan is adopted.
Recommendation: To strengthen the oversight of corporate performance and to increase the accountability of Amtrak's management for achieving the goals and objectives it establishes, and to provide the needed transparency among key internal and external stakeholders, the chairman of Amtrak's board and the board members should identify, in consultation with Amtrak's president and senior management, the type and frequency of information required to implement the policies and procedures for oversight.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. A strategic plan has not been adopted. Amtrak's president resigned in November 2008 and an interim president has been appointed. It is uncertain when a new strategic plan and corporate oversight measures will be adopted. RJ 12/15/08. Previous updates: As of September 2008, Amtrak's Board of Directors had not adopted any resolutions or actions establishing formal policies or procedures for oversight of the company. In addition, the company was in the process of developing a strategic plan. Finally, action item update reports that were being used to track performance on certain corporate initiatives were terminated in January 2008. We will continue to monitor this recommendation to determine if formal oversight policies or procedures are established.
Recommendation: To strengthen the oversight of corporate performance and to increase the accountability of Amtrak's management for achieving the goals and objectives it establishes, and to provide the needed transparency among key internal and external stakeholders, the chairman of Amtrak's board and the board members should, in conjunction with Amtrak's management, assess the financial and other resources that will be required to develop the measures and information required to conduct cost-effective oversight, and prepare an action plan to implement needed changes in information and data systems to provide the reports and other documents required to meet the oversight policies and procedures adopted.
Agency Affected: National Railroad Passenger Corporation (AMTRAK)
Status: In process
Comments: Update as of 12/15/08: No change. Although Amtrak's Board of Directors provides oversight of the corporation, no formal policies or procedures have been adopted for conducting such oversight. More importantly, Amtrak has not formulated or adopted overall corporate performance measures based on specified goals, objectives, and outcomes with which to conduct the type of oversight envisioned by this recommendation. RJ 12/15/08. Previous updates: As of September 2008, Amtrak's Board of Directors had not adopted resolutions or actions establishing policies or procedures for formal oversight of the corporation. Until January 2008, Amtrak's Board had received monthly briefings and action plan updates about the progress of certain corporate initiatives. These updates were terminated since Amtrak is developing a new strategic plan. A review of an action plan update provided to the Board of Directors showed they were focused on specific corporate initiatives such as growing revenue a certain percentage or reducing costs a specified amount and not on overall corporate performance. We will continue to monitor the status of this recommendation.
Recommendation: To strengthen Department of Transportation and Federal Railroad Administration oversight of Amtrak's performance, the Secretary of Transportation direct the Federal Railroad Administrator to work with Amtrak's board and management to develop measures of overall corporate performance and related outcomes.
Agency Affected: Department of Transportation
Status: In process
Comments: In September 2006, the Federal Railroad Administration stated that it raised the issue of corporate performance metrics with Amtrak's executive and staff levels and of development of metrics related to Amtrak's strategic initiatives. However, corporate performance metrics have yet to be developed. The Passenger Rail Investment and Improvement Act of 2008 require Amtrak, FRA, the Surface Transportation Board (STB) and others to develop performance metrics for Amtrak's train operations. These metrics are to be finalized in early 2009. We will monitor these metrics and FRA's actions related to these metrics to determine whether they contribute to preparation of overall corporate performance metrics.
Recommendation: To strengthen Department of Transportation and Federal Railroad Administration oversight of Amtrak's performance, the Secretary of Transportation direct the Federal Railroad Administrator to require Amtrak to report on these measures of corporate performance and outcomes at least annually.
Agency Affected: Department of Transportation
Status: In process
Comments: No corporate performance metrics have been developed to date and the performance metrics contained in the Passenger Rail Investment and Improvement Act of 2008 (enacted in October 2008) have not yet been developed. We will continue to monitor this recommendation in light of the new law.
Recommendation: To strengthen Department of Transportation and Federal Railroad Administration oversight of Amtrak's performance, the Secretary of Transportation direct the Federal Railroad Administrator to identify and make known to Amtrak the range of potential consequences of not meeting, or making sufficient progress toward, a minimum level of performance on the corporate measures and outcomes.
Agency Affected: Department of Transportation
Status: In process
Comments: FRA told us that it reserves the right to withhold funding from specific trains in its grant agreements with Amtrak. In addition, when Amtrak's Board of Directors approves the final budget for a fiscal year the amount of federal appropriations is certain and the consequences of failing to meet the budget are known to the Board. In addition, FRA prohibits Amtrak from using operating grant money for debt service or capital projects. These are all steps in the right direction. However, full implementation of this recommendation would require development of corporate performance measures. We will continue to monitor actions in relation to performance measures to be developed under the Passenger Rail Investment and Improvement Act of 2008.
Recommendation: To strengthen Department of Transportation and Federal Railroad Administration (FRA) oversight of Amtrak's performance, the Secretary of Transportation direct the Federal Railroad Administrator to report annually to Congress on the results of FRA's oversight of Amtrak's corporate performance and Amtrak's progress toward meeting minimum levels of performance and outcomes (this report should identify any specific actions Congress should consider taking to better facilitate progress on achieving specific outcomes or to identify alternative ways the outcome might be achieved).
Agency Affected: Department of Transportation
Status: In process
Comments: In September 2008, FRA told us it presents its views on Amtrak's performance in the annual President's Budget request and in testimony provided during annual congressional appropriation hearings. These are both important means of reviewing and reporting on Amtrak's performance. However, this recommendation envisioned a more formal report on Amtrak's performance based on the corporate performance metrics recommended elsewhere. We will continue to monitor this recommendation in light of requirements for performance metrics contained in the Passenger Rail Investment and Improvement Act of 2008.
