Posts Tagged ‘GAO’

GAO Report On Passenger Rail Car Costs

Passenger railcar purchase is such a fiasco in the USA, one might think the GAO would look into it.

In fact, they did — as recently as 2010. Their report, Potential Rail Car Cost-Saving Strategies Exist, starts out promising enough:

U.S. demand for transit rail cars is limited and erratic and orders tend to be for customized cars. Transit rail cars in the U.S. comprise about 5 percent of the worldwide fleet. Transit agencies’ purchases vary considerably over time: A large transit agency may replace its entire fleet in 1 year, contributing to a spike in the market, whereas in other years, there may be only a fraction of that demand for the U.S. market. Transit agencies often request custom car designs to address not only legacy infrastructure requirements and interoperability issues with existing fleets, but also preferences. Rail car orders of small size and demand for customized cars can increase the price per car by, for example, concentrating design costs among fewer cars.

The federal government provides some funding for transit rail cars and has varying levels of involvement in setting design standards for transit rail cars. More than half of the transit agencies GAO interviewed purchased rail cars with some type of federal funding, such as formula or discretionary capital funds. When transit agencies use federal funds to purchase rail cars, certain requirements apply, such as “Buy America”—which requires, among other things, that rail cars be assembled in the United States.

Unfortunately, the study is a disappointment as the GAO fails to connect the dots. They don’t make the connection between “Buy-America” and the cost blowouts. Nor does the GAO investigate why transit agencies are hiring consultants to design boutique trains (and no, it isn’t a problem of legacy infrastructure).

And then there is the FRA-compliant nonsense. Getting rid of the FRA buff-strength rules would solve a lot of problems, but here the GAO doubles down:

FRA enlisted APTA’s assistance to help develop safety standards for commuter rail cars and then expanded the effort to establish industry standards and recommended practices for commuter rail car safety. According to FRA and APTA officials, his has led to greater uniformity in the design and production of commuter rail cars. This greater uniformity could alleviate some of the market difficulties that we previously discussed resulting from customized designs.

Of course, we now know that this FRA “standardized” design had the opposite effect. For example, Amtrak’s latest order for 130 new bi-level railcars came with an absurd price tag.

So how did the GAO get it so wrong? Well, it is clear that the GAO only consulted with domestic manufacturers, and the APTA union — i.e. rent seekers who benefit from the existing regulatory framework. Or perhaps the GAO wasn’t really interested in solving the problem. In any case, transit advocates really need to have input on these GAO audits.

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