(With additional commentary by James M. Tilley, Vice Chair, The Aurora Group, and President, Florida Coalition of Rail Passengers). On Dec. 18, Railway Age Editor-in-Chief William C. Vantuono reported on recently released findings by the Office of the Inspector General (OIG) at Amtrak, which detailed some problems with the railroad’s Long-Distance Fleet Replacement (LDFR) program and made some recommendations to management, in a story headlined Amtrak OIG: LDFR Program ‘High Risk.’ In his story, Vantuono summarized the OIG report, which concentrated on pointing out suggested steps to reduce risk and delays in the process for procuring new bilevel cars to replace the Superliner I equipment operating primarily on trains west of Chicago and New Orleans, and on the Auto Train.
The OIG report’s recommendations were internal in nature. The suggestions included clarification of responsibility and authority for managers involved in the procurement process, filling key management positions quickly, and updating and including “contingency plans for high-impact risks.” The article contains a link to the OIG report, which was authored by Assistant I.G. J.J. Marzullo and runs 19 pages, plus 11 pages of appendices.
A review of the report itself shows that the recommendations appear to make sense, under the circumstances. The report also had a familiar ring to it. It was like the reports about management performance and communication, risk avoidance and lines of authority I was often required to read more than 50 years ago, when I was in business school pursuing an MBA. It does not appear that the basic management principles have changed much since that time. Whether or not Amtrak itself has changed much since that time is an issue situated far from the purview of this commentary.
Here are a few more highlights. The report cited these results: “Complex requirements caused delays and pose additional risks” and “Capital Delivery established an LDFR program framework but could strengthen two areas.” The OIG recommended that contingency plans be established for the highest risks, and that lines of authority among managers on the program should be clearer (at 2-3).
As part of the “Background” section (at 4), the report said: “In fiscal year (FY) 2023, the Long Distance Service Line carried more than 3.9 million passengers – 14% of the company’s ridership. That same year, it generated $563 million – more than 25% of the company’s ticket revenue. The company’s Long Distance network provides mobility and an economic link for communities around the country, but the network has historically operated at a financial loss.” Some rider-advocates outside the Northeastern region of the country say that, notwithstanding the final clause of that quotation, the numbers presented there demonstrate the success of the long-distance network. To a more casual observer, 25% of systemwide revenue from only 14 routes (recently consolidated to 13) for non-motorists and motorists to ride and one that caters only to motorists sounds like a success story, especially considering that none of those routes run more than one daily frequency and two of them have trains that operate only three days per week in each direction.
The next paragraph said: “Long distance fleet: As of October 2023, the company’s long distance fleet included 765 bilevel and single level cars from 5 different fleets the company bought throughout its history. Some of this equipment is more than 40 years old, as Table 1 shows” (Id., cited by Vantuono). Table 1 is instructive, because it shows the five different types of long-distance equipment currently in service and specifying the age and number of cars of each class. Of the 765 cars in total, both active and inactive, the latter group “including equipment placed in long-term storage pending different business needs, and damaged equipment awaiting repair.” Cars that are in the shops “for routine maintenance or overhaul work” are considered “active.” There are 257 Superliner I cars, with an average age of 43. There are also 142 Amfleet II cars whose average age is 41, used mostly on trains that go to New York. Together, these classes of cars comprise 52% of the total LD fleet. The next-oldest groups of 185 Superliner II cars (28 years old) and 51 Viewliner I cars (27 years old) comprise 31% of the fleet. The other 130 cars, or 17%, are Viewliner II cars, which are about six years old. These numbers show that 52% of cars in today’s fleet are reaching the end of their useful lives, while another 31% will reach that point in about 10 to 15 years. So, while the OIG report did not stress that fact or conclusion, it appears essential that Amtrak replace the existing fleet as quickly as possible, or there might not be enough equipment to run the current network, especially with sufficiently long consists.
The report stated: “Our audit focuses on Phase 1, which the company plans to complete in 2035 at an estimated cost of $7 billion” (at 5). It also said: “Phase 1 of the LDFR program – replacing close to 600 bilevel cars with multiple car types, including sleepers – is inherently complex, and the company’s initial requirements for premium designs and amenities contributed to this complexity” (at 7). Looking at the different phases of the overall procurement process, Phase 1 is described as “Procuring bilevel equipment for the company’s western routes that use Superliner 1 cars” (at 5, also quoted by Vantuono). Phase 2 would involve procuring bilevel equipment for the Auto Train and “potentially converting some bilevel routes to single-level routes,” Phase 3 is a procurement “to increase fleet capacity to expand service and increase ridership,” while Phase 4 would procure single-level long-distance cars.
The four phases of the entire procurement process, as Amtrak defines them, raise some questions about when Amtrak managers, and especially Amtrak’s riders, can reasonably expect new equipment to run on the railroad’s skeletal long-distance network. It is now no larger (and arguably smaller) than it was when Amtrak began operations in 1971. Phase 1 is only directed toward replacing the equipment now running on the western trains (the eastern-most train under that definition would be the City of New Orleans between that city and Chicago). That phase of the program is supposed to replace “close to 600 bilevel cars” with various car types, but those cars serve different purposes. Between the Superliner I and Amfleet II cars in the inventory, whether active or inactive, this adds up to 442 cars. That number does not agree with the “close to 600” mentioned for Phase 1. In addition, Phase 2 calls for purchasing new cars for the Auto Train, which would require another purchase beyond the Phase 1 procurement. Those numbers don’t appear to add up, and it would be helpful to get some clarification from Amtrak.
There is a more serious problem, though. Perhaps the worst risk of delay is one that the report did not mention, at least not directly. According to the report, Phase 1 will not be completed until 2035, ten years from now (give or take a few days, due to the date of this writing). The big issue is whether the existing long-distance fleet can last long enough for new equipment to be designed, ordered, built, purchased, delivered, tested, certified and placed into service.
In 2035, the average Superliner I car will be 54 years old and the average Amfleet II car will be 52. The next two replacements, the Superliner II and Viewliner I cars, would be 39 and 38, respectively. At that time, they will be approaching the end of their useful life, unless Amtrak “freezes” the age of the Superliner II cars at 39, like legendary comedian Jack Benny, who stated his age as “39” for the rest of his life.
The big question is whether the Superliners in the West and on the Auto Train and the Amfleet cars in the East can soldier on until new equipment can arrive to replace them. Looking only at the Superliners for the moment, because the OIG report concentrated on replacing that class of equipment, recent developments lead toward an answer of “probably not.”
Superliner train consists have shrunk lately, especially since Amtrak cut service from daily to tri-weekly on all those trains (except the Sunset Limited, which has run on a tri-weekly schedule since 1970, when the Southern Pacific was still running it) in 2020, after the COVID-19 virus hit. Congress later mandated that those trains return to daily operation, and it took Amtrak 19 months to restore that frequency of service completely. For some time, the Sunset and the now-deceased Capitol Limited ran with only one sleeping car and one coach. Now, the schedule of the former “Cap” has been consolidated with that of part of the route of the Silver Star, also recently deceased. In effect, riders from the “Star” on the portion of the Northeast Corridor north of Washington, D.C. and as far as New York lost their one-seat ride so Amtrak could reassign 15 Superliner cars to other trains, whether or not Amtrak acknowledges that officially.
Is that sort of operation indicative of a railroad that has enough equipment to run its current schedule reliably, while supplying enough sleeping car rooms and coach seats to meet reasonable customer demand without sending fares through the proverbial roof? Probably not. Can that sort of operation continue reliably for at least ten more years with cars that are now approaching their mid-40s? Without a program to repair every car on the property and return them to service, and unless that program is implemented with the urgency of a war effort, such a result appears highly unlikely.
The industry’s capacity to build new equipment is limited, too. The OIG report detailed the results from Amtrak’s 2023 Request for Information (RFI) concerning the procurement at issue (at 8). Six car builders responded to the first RFI, four responded to the second, and only one said that it could produce the variety of cars that Amtrak planned to order, including two types of cars (presumably sleeping cars and coaches) with elevators, an untested technology for passenger railcars. While the report says that Amtrak managers have abated some of the complexity in the current procurement process, it does not claim that the amount of complexity has been reduced below the “mega” level. Ordering untested technology, like elevators in the cars, is always expensive, due to the R&D costs that must be amortized over the number of units built according to the contract for the order. In addition, it is not always clear that first-time technology will necessarily accomplish its objective in day-to-day operation. One example takes the word “clear” quite literally. New Jersey Transit operates hundreds of “MultiLevel” cars that were ordered from Bombardier (since acquired by Alstom) in 2006 and 2012. Many of the windows on that equipment, made of polycarbonate material, have been self-degrading for the past few years and gotten cloudy, some to the point of translucency. The agency now plans to replace those windows as part of its maintenance program, but it will cost $8 million to do so.
The report does not mention the names of the builders who are looking to supply the new equipment under this procurement. It is reasonable to assume that Alstom and Siemens have responded, but some Alstom equipment has been problematic (the new “Acela II” Northeast Corridor trainsets still have not entered service). Stadler has been mentioned, but that company has only built a small amount of equipment now in service in the U.S., all running on local operations, like NJ Transit’s River LINE in South Jersey, TEXRail in Fort Worth and Caltrain.
VIA Rail is also looking to order new cars to replace the ones that The Budd Company built for Candian Pacific for its flagship Canadian in 1954. That equipment is among the last of the “Streamliner” equipment from the latter part of the Golden Age of Passenger Trains from the mid-20th century, and riding on it is an experience adored by railfans and experienced travelers generally (at least those who spend the money to ride in a sleeping car). Plans call for that legendary equipment to be retired in 2035, at the venerable age of 81.
Railway Age Executive Editor Marybeth Luczak reported the latest step in VIA Rail’s procurement efforts, a Dec. 9 Request for Qualification (RFQ) for new locomotives and cars for its non-corridor network, which runs either two or three weekly frequencies as far west as Vancouver and Prince Rupert, B.C., as far east as Halifax, Nova Scotia, and as far north as the isolated town of Churchill, Manitoba. According to the fact sheet attached to Luczak’s report, VIA Rail plans to order “more than 40 locomotives and 300 cars,” which would be the largest procurement in its history.
So Amtrak and VIA Rail will order large amounts of new equipment soon, and both will expect to take delivery on those orders in 2035. VIA Rail’s plans call for new designs for that railroad, including windows that wrap around at the top (like those on Amtrak’s Superliner lounge cars) and dome cars for the now twice-weekly Canadian between Toronto and Vancouver, according to Luczak’s report. Maybe Amtrak and VIA Rail could have pooled their orders and standardized the equipment they plan to purchase. That might have expedited the procurement process, but both railroads have made it clear that they want to place separate orders for the new cars they want, which will differ from each other’s.
The OIG report made suggestions for tightening the management structure, as well as procedures for the procurement process, recommendations that appear to make sense from a “business school” point of view. The affected managers at Amtrak seem willing to implement those suggestions (at 17-19, with comments from those managers at 23-26). Efficiency measures are usually helpful, but they might not advance the delivery date significantly in this instance, at least not enough to make a genuine difference.
We can only speculate on whether Amtrak can keep its current long-distance operations going, at least with current consists, until new equipment arrives. If they can, we will not know that until those cars are in service, at least ten years from now. If they can’t, we will know much sooner, as all or part of the current skeletal Amtrak long-distance network dies completely or at least shrinks by attrition.
UNSERIOUS PEOPLE
By James M. Tilley, Vice Chair, The Aurora Group, and President, Florida Coalition of Rail Passengers
As Amtrak enters the fourth year after passage of the Infrastructure Investment & Jobs Act, the railroad has yet to finalize any plans to order long-distance railcars for its overnight routes. As long ago as 2010, Amtrak leadership spoke openly about the need to replenish this fleet. However, as Amtrak emerged from the pandemic, it quickly became clear that no thought had been given as to how this might be accomplished, nor had any builders been engaged to brainstorm the issue.
A Request for Proposals (RFP) was issued a year ago soliciting bids for this project to be submitted by last May. After 10 amendments and two bid date extensions, actual builder proposals were due to be submitted a few days ago. The results are unknown, but Amtrak’s Inspector General weighed with his team’s assessment of the process so far:
In November 2023 “the company decided to procure bilevel cars … “It also decided to proceed with 9 different suggested car types and elevators on two car types.” Company executives “decided to push the limits of what carbuilders said was feasible.”
The overriding theme to this report: “Complex design requirements pose schedule, cost and other risks.” Moreover, these design decisions by Amtrak leadership were made after concerns and reservations were communicated to Amtrak by the supply community.
“Only one (builder) said it could produce the 8 to 9 car types the company planned to request.” The builder further stated that “doing so and delivering it (the railcars) as a trainset would inevitably lead to capacity constraints, challenges in the initial builds, and overall delays in the program.” No builder “reported having any experience producing elevators inside the trainset.”
A recurring theme is that Amtrak’s complex request risks further delay to product delivery while at the same time exposing Amtrak to unplanned cost risk: “The RFP schedule could slip further as it is aggressive with no cushion, and the procurement remains complex, according to company (Amtrak) management.”
In Amtrak’s Fiscal Year 2025 Congressional Grant Request the cost of this fleet replacement was estimated to consume $7 billion of the $22 billion of the advanced appropriation awarded via the IIJA. OIG now reports that “multiple company officials told us they anticipate that the carbuilders’ proposals will exceed cost estimates, especially given the overall complexity and extended delivery timeframe.”
In addition to all this, the following key players are no longer involved. Several have not been replaced, with OIG citing this management “churn” as another project sensitivity:
- Vice President-Long Distance Service Line (resigned).
- Vice President-Project Delivery of Fleet and Facilities (resigned).
- Vice President-Product Development and Customer Analytics-reassigned (no replacement).
- The Senior Procurement Director assigned to this project (resigned).
- The Capital Delivery Senior Director (the manager tasked with overseeing the entire program) (resigned).
“Perfect is the enemy of good” is an aphorism that means insistence on perfection often prevents implementation of good improvements. Achieving absolute perfection may be impossible One should not let the struggle for perfection stand in the way of appreciating or executing something that is imperfect but still of value.
This RFP to replace the long-distance fleet is clearly in trouble. The Amtrak Board of Directors needs to assert control. A prudent course of action might very well entail rebuilding portions of the existing fleet and procuring additional single-level equipment to enable redeployment of existing bilevel cars to Western routes. Stretch out or downsize the new car procurement.
Time kills all deals. Intentionally or not, this equipment order is going “off the rails,” which places the long-distance network, perhaps Amtrak, itself, at high risk.
