Summary: Pursuant to a congressional request, GAO reviewed the National Railroad Passenger Corporation's (Amtrak) Revenue Enhancement Program, which Amtrak used to generate income by competing with the private sector in order to reduce federal subsidies, focusing on: (1) the impact of Amtrak's revenue enhancement activities on reducing the federal subsidy; and (2) whether Amtrak competed fairly when bidding on a 1988 rail welding contract.
GAO found that: (1) although Amtrak generated net income of $140.9 million between 1984 and 1988, that did not substantially reduce Amtrak's $3-billion federal subsidy; (2) Amtrak's revenue enhancement activities would not greatly reduce the need for federal subsidies, since it generated the revenues from leases that would expire by 2004, the maintenance facilities that it could use for mass transit passenger car assembly were at or near capacity, and competition outside the Northeast corridor was limited because of high transportation costs; (3) Amtrak did not provide Congress with detailed financial information concerning current and planned revenue enhancement projects and their contribution to total projected revenue; and (4) it was unclear whether Amtrak competed fairly for the track welding contract, because it used outdated cost data, its profit margin was lower than customary, and it did not properly segregate and assign all contract costs.
