Amtrak’s internal yet independent Office of Inspector General (OIG) has released a report on Phase 1 (of four) of the railroad’s Long Distance Fleet Replacement (LDFR) program, defining the $7 billion initiative as “high risk” and identifying “shortcomings” that could create additional delays and cost increases.
In Major Programs: Company Established a Management Framework for Long-Distance Fleet Replacement Program but Can Improve Risk Management and Clarify Lines of Authority (OIG-A-2025-001, download below), the OIG noted that Amtrak’s LDFR program “will be the single largest equipment acquisition by cost and volume in the company’s history and will define the nature of its long-distance service for decades to come … This acquisition is complex; the equipment the company intends to procure includes several different car types—each of which would have new designs that have never been manufactured before. The LDFR program is in its early stages, and due to its size and high risk, the company has designated it a ‘mega-complexity program.’”
The LDFR program has four phases:
- Phase 1: Procuring bilevel equipment—close to 600 bilevel cars with multiple car types, including sleepers—for the company’s western routes that use Superliner I cars.
- Phase 2, LDFR contract option: Procuring bilevel equipment for the Auto Train and potentially converting some bilevel routes to single-level routes.
- Phase 3, LDFR contract option: Procuring equipment to increase fleet capacity to expand service and increase ridership.
- Phase 4, not included in a December 2023 Request for Proposals (RFP): Procuring single-level long-distance equipment.
OIG’s audit focuses on Phase 1, which Amtrak plans to complete in 2035 at an estimated cost of $7 billion. The company’s initial RFP, released in December 2023, solicits carbuilder pricing for LDFR’s Phase 1 (base order) and includes contract options for Phases 2 and 3. To fund Phase 1, OIG noted, Amtrak “plans to use part of the $22 billion in direct funding provided by IIJA. The remaining three phases do not yet have specified funding sources.”
Summary
Amtrak “is in the process of identifying carbuilders for the first phase of the LDFR program—intended to replace equipment on nine routes—and has established a management framework to execute the program once it selects a carbuilder,” OIG said. “Early challenges in developing design requirements for the trainsets, however, have delayed the schedule. Moreover, the complexity of the program itself, which the company acknowledges, poses an innate risk of cost increases and additional delays. Given the LDFR program’s significant size, any material cost or schedule increases could have cascading impacts on the company’s ability to accomplish other major capital projects and maintain its existing long-distance service. Specifically, we identified the following shortcomings:
“Complex requirements caused delays and pose additional risks. The LDFR program is inherently complex, and the company’s initial requirements, including premium designs and amenities, contributed to this complexity. Carbuilders provided feedback, however, about their ability to meet some of these requirements, causing the company to amend its requests, which delayed the procurement by seven months. As the company moves to select a carbuilder, the more complexity it opts for in the acquisition, the greater its potential cost and schedule risk.
“Capital Delivery established an LDFR program framework but could strengthen two areas. Capital Delivery’s management framework for the LDFR program improved on those of the company’s previous major programs, but it could strengthen two components. First, although the department established a risk management plan, Capital Delivery has not developed contingency plans for the highest risks, as company standards require. Second, the lines of authority on the program have been unclear from the outset, resulting in slow decision making that may be exacerbated by recent departures in program leadership. Addressing these components could help mitigate the risk of schedule delays and cost increases.
“Because the company is in the process of amending its requirements for the trainsets, we are not making a recommendation in this area, but we note that any future decisions that add complexity to this program warrant thoughtful consideration and caution. Regarding the management framework, we recommend that the company review and clarify the roles, responsibilities, and lines of authority for each stage of the program; fill program vacancies; and identify contingencies for its major risks.
“In commenting on a draft of this report, [Amtrak] agreed with our recommendations and detailed the actions it plans to take, or has taken, to address them.”
Management Instability?
“Recent program leadership departures could exacerbate decision making challenges,” OIG noted. “Two years into the program, the company executives tasked with overseeing the program have changed, and senior managers and executives from the primary departments involved in the program—including Commercial, Capital Delivery, and Procurement—have left the company or been reassigned. These changes are significant and include the following:
- “January 2024 – The Vice President of the Long Distance Service line retired.
- “January 2024 – The Vice President Project Delivery of Fleet and Facilities resigned from the company. The company named the previous head of the New Acela program as Acting Vice President, Project Delivery Fleet & Facilities, beginning Jan. 10, 2024, and promoted them to the position in June 2024.
- “April 2024 – The Vice President for Product Development and Customer Analytics was tasked with a new role and is no longer the lead decision maker for the Commercial department.
- “June 2024 – The Senior Procurement Director assigned to the LDFR program resigned from the company.
- “July 2024 – The Capital Delivery Senior Director—the manager tasked with overseeing the entire program—resigned from the company.
“As of August 2024, the company had not replaced three of these officials, although it reassigned some of their duties. We have previously reported that on a major equipment acquisition, vacancies and officials with competing responsibilities pose significant cost and schedule risks. Accordingly, these senior vacancies may exacerbate the existing uncertainty about decision making and create an additional gap in the lines of authority on the LDFR program. For example, as of September 2024, program documents have not yet been updated to reflect these more recent leadership changes. Without establishing clear roles, responsibilities, and lines of authority for each stage of the program and filling key senior positions, the company risks delaying decision making, which could lead to increased costs and schedule delays.”
Recommendations
“Since the company is in the process of amending its requirements for the trainsets, we are not making a recommendation in this area but note that any future decisions that add complexity to this program warrant thoughtful consideration and caution,” OIG said. “To address the other issues identified, we recommend that the Executive Vice President, Capital Delivery—in consultation with the Executive Vice President, Marketing and Chief Commercial Officer and the Executive Vice President, Business Transformation and Chief Financial Officer … review and clarify for all stakeholders the roles, responsibilities, and lines of authority and decision making for each stage of the program and update program documentation accordingly. In addition, we recommend that the Executive Vice President, Capital Delivery; Executive Vice President, Marketing and Chief Commercial Officer; and Executive Vice President, Business Transformation and Chief Financial Officer each take the following actions: Prioritize filling key senior management vacancies as soon as practical. In addition, prioritize filling key program team vacancies, as appropriate, including those requested for FY 2025. Further, we recommend that the Executive Vice President, Capital Delivery update the program’s risk register to include contingency plans for high impact risks.”
