Testimony 

Before the Subcommittee on Railroads, 

Committee on Transportation and 

Infrastructure, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Wednesday, May 11, 2005 AMTRAK

Acela’s Continued Problems 

Underscore the Importance 

of Meeting Broader 

Challenges in Managing 

Large-Scale Projects 

Statement of JayEtta Hecker, Director 

Physical Infrastructure Issues 

GAO-05-698T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-698T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact JayEtta Z. 

Hecker, (202) 512-2834, heckerj@gao.gov. 

Highlights of GAO-05-698T, a report to 

Subcommittee on Railroads, Committee 

on Transportation and Infrastructure, 

House of Representatives 

May 11, 2005

AMTRAK

Acela's Continued Problems Underscore 

Importance of Meeting Broader 

Challenges in Managing Large-Scale 

Projects 

Significant issues and controversy have impacted the Acela program since 

its inception. According to Amtrak, what started out as a simple 

procurement of train equipment evolved into a complex high-speed rail 

program. Acela has encountered numerous difficulties due to such things as 

new technology and production delays. Even after Acela service began, 

unexpected problems were encountered, which required Amtrak to remove 

the trainsets from service, resulting in lost revenue. 

Concerns about the quality of the Consortium of train manufacturers’ 

(Bombardier and Alstom) work and Amtrak’s withholding of payments for 

the Acela trainsets resulted in the parties suing each other, each seeking 

$200 million in damages. Amtrak and the Consortium reached a negotiated 

settlement in March 2004. Although the settlement agreement protects 

Amtrak through certain warranties, loss of revenue resulting from removal 

of trains from service is not directly recoverable. Under the settlement, 

Amtrak is conditionally scheduled to assume maintenance functions from 

the Consortium in October 2006. 

Aside from the current problems, Amtrak faces other risks and challenges to 

the recent settlement, including obtaining technical expertise and providing 

sufficient funding for maintenance. Achieving a successful transition is 

critical to Amtrak given the importance of the Acela program. The recent 

brake problems may impact the transition through such things as delayed 

management training. 

As GAO reported in February 2004, Amtrak had difficulties managing the 

Northeast High Speed Rail Improvement Project and many critical elements 

of the project were not completed and the project goal of a 3-hour trip time 

between Boston and New York City was not attained. GAO has ongoing 

work addressing Amtrak management and performance issues that GAO 

plans to report on later this year. 

Timeline of key events 

In 1996, the National Railroad 

Passenger Corporation (Amtrak) 

executed contracts to build highspeed trainsets (a combination of 

locomotives and passenger cars) as 

part of the Northeast High Speed 

Rail Improvement Project. Since 

that time, Amtrak has experienced 

multiple challenges related to this 

program, including recently 

removing all trains from service 

due to brake problems. Amtrak has 

struggled since its inception to earn 

sufficient revenues and depends 

heavily on federal subsidies to 

remain solvent. The April 2005 

action to remove the Acela 

trainsets—Amtrak’s biggest 

revenue source—from service has 

only exacerbated problems by 

putting increased pressure on 

Amtrak’s ridership and revenue 

levels. 

This testimony is based on GAO’s 

past work on Amtrak and focuses 

on (1) background on problems 

related to the development of the 

Acela program, (2) summary of 

issues related to lawsuits between 

Amtrak and the train 

manufacturers and the related 

settlement, (3) key challenges 

associated with the settlement, and 

(4) initial observations on possible 

challenges in Amtrak managing 

large-scale projects. 
Page 1 GAO-05-698T 

Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to testify on the National Railroad Passenger 

Corporation’s (Amtrak) Acela program and the overall management of the 

corporation. Intercity passenger rail is at a critical crossroads regarding its 

future in the United States. Amtrak has struggled since its inception to 

earn sufficient revenues and depends heavily on federal subsidies to 

remain solvent. The April 2005 action to remove the Acela trainsets—the 

combination of locomotives and passenger cars—from service has only 

exacerbated problems by putting increased stress on Amtrak’s ability to 

maintain ridership and revenue levels and could make Amtrak’s financial 

condition even more precarious. Amtrak’s Acela program accounted for 

not quite one-fourth of the ridership and about 44 percent of revenue on 

the Northeast Corridor—Amtrak’s busiest rail route—in fiscal year 2004. 

My statement today addresses numerous issues of interest to the Congress 

as it delves into Amtrak’s handling of this most recent incident involving 

Acela, and more generally, the future of intercity passenger rail in this 

country. I will cover four areas: (1) background on the problems Amtrak 

experienced during the development of the Acela program, (2) a summary 

of issues related to the lawsuits between Amtrak and the consortium of 

train manufacturers (the Consortium), Bombardier and Alstom, and the 

subsequent settlement, (3) key challenges associated with implementing 

the settlement, and (4) possible broader challenges at Amtrak in managing 

other large-scale projects. The information I will present is primarily based 

on reports that we have issued over the last several years.1

 

Significant issues and controversy have impacted the Acela program since 

its inception. Among the issues that have impacted the Acela program are 

the following: (1) potential difficulties due to new technology, (2) impacts 

from new safety standards to accommodate high-speed rail, (3) 

manufacturing and production delays, and (4) abbreviated testing of the 

trains prior to placement in revenue service. The Acela trainsets are not an 

“off-the-shelf” piece of equipment but rather a combination of both new 

and existing technology. According to the Federal Railroad Administration 

(FRA), this was the first time this particular combination of new and 

existing technology had been designed as one unit. As such, the equipment 

required considerable time to develop and test, and the probability of 

expected and unexpected problems was high. Furthermore, the trainset 

 1

See the enclosure for a list of related GAO products. 
Page 2 GAO-05-698T 

grew in weight and cost due to new safety regulations. The Consortium 

also encountered production delays. With Amtrak under considerable 

financial and time pressures to place the trainsets into service; therefore, 

trainset testing was abbreviated. In addition to building the Acela trainsets, 

the Consortium entered into a contractual arrangement with Amtrak to 

manage the Acela facilities and maintain the trainsets, including training 

and supervising Amtrak employees. Since the trainsets were placed into 

revenue service in 2000, unexpected problems have been encountered that 

have resulted in lost revenue and damaged the image of the Acela 

program. For example, an equipment failure forced Amtrak to withdraw 

the Acela trainsets from service for 2 months in 2002. As problems and 

difficulties mounted, increased tension between Amtrak and the trainset 

manufacturer led to legal action against each other. 

• Concerns about the quality of the Consortium’s work and Amtrak’s 

withholding of payments for the Acela trainsets resulted in the parties 

suing each other, each seeking $200 million in damages. Amtrak and the 

Consortium reached a negotiated settlement in March 2004. In general, 

under the settlement, the Consortium must complete modifications to the 

trainsets and locomotives, achieve established performance requirements, 

provide training to Amtrak staff, and provide and extend warranties. In 

addition, Amtrak agreed to release a portion of previously withheld funds 

and will conditionally assume facility management and trainset 

maintenance responsibilities as soon as 2006, rather than in 2013, as 

originally planned; if the Consortium satisfactorily completes its 

commitments under the settlement agreement. 

• Our work evaluating the terms of the settlement led us to conclude that 

Amtrak faces other risks and challenges to sustain the trainsets and keep 

them operating.2

 Achieving a successful transition is critical to the 

financial well-being of Amtrak, given that the Acela program is such a 

significant source of its revenue. The challenges include (1) completing 

modifications and meeting performance requirements, (2) obtaining 

technical expertise for maintenance and completing training, (3) 

sufficiently funding maintenance and integrating responsibilities, and (4) 

preparing a comprehensive implementation plan. Addressing and resolving 

these challenges will not be easy. Although the settlement agreement 

 2

GAO, Intercity Passenger Rail: Issues Associated with the Recent Settlement between 

Amtrak and the Consortium of Bombardier and Alstom, GAO-05-152 (Washington, D.C.: 

Dec. 1, 2004). 
Page 3 GAO-05-698T 

ensures that Amtrak will be protected by the extended trainset warranties 

and Amtrak has several methods of financial recourse if the Consortium 

does not honor warranties, loss of revenue resulting from removal of 

trainsets from service is not directly recoverable. However, the full extent 

of the legal liability has yet to be addressed by the parties. Amtrak officials 

told us that their first priority is getting the trainsets back in service. In 

addition, the recent brake problems may impact the transition of the 

maintenance function to Amtrak through such actions as delaying 

management training. Amtrak officials continue to believe the transition 

will occur in October 2006, however. 

• Amtrak also faces challenges in managing other large-scale projects. As we 

reported in February 2004, Amtrak had difficulties managing the Northeast 

High Speed Rail Improvement Project (NHRIP), a multi-year, multi-billion 

dollar project to electrify the tracks between Boston, Massachusetts, and 

New Haven, Connecticut, acquire high-speed trains, and make capital 

improvements. Among the problems we found were that (1) Amtrak’s 

management of this project was not comprehensive but was focused on 

the short term; (2) project management focused on separate components 

of the project, such as electrification and acquisition of the high-speed 

trains, and not on the project as a whole; and (3) Amtrak did not 

sufficiently address major infrastructure improvements needed to attain 

project goals. The overall results were that many critical elements of the 

project were not completed, project costs and schedules increased 

considerably, and the project goal of a 3-hour trip time between Boston 

and New York City was not attained. 

The Rail Passenger Service Act of 1970 created Amtrak to provide intercity 

passenger rail service because existing railroads found such service to be 

unprofitable. Amtrak operates a 22,000-mile network, primarily over 

freight railroad tracks, providing service to 46 states and the District of 

Columbia. Amtrak owns about 650 miles of track, primarily on the 

Northeast Corridor between Boston, Massachusetts, and Washington, D.C. 

In fiscal year 2004, Amtrak served about 25 million passengers, or about 

68,640 passengers per day. According to Amtrak, about two-thirds of its 

ridership is wholly or partially on the Northeast Corridor. The Northeast 

Corridor is the busiest passenger rail line in the country, and some 200 

million Amtrak and commuter rail travelers use the Corridor, or some part 

of it, each year. On some portions of the Northeast Corridor, Amtrak 

provides high-speed rail service (up to 150 miles per hour). The high-speed 

Acela program is the centerpiece of Amtrak’s intercity passenger rail 

system, with its financial contributions to the company exceeding that of 

all other routes combined. 

Background 
Page 4 GAO-05-698T 

Acquisition of the Acela trainsets occurred as part of NHRIP. NHRIP, and 

its predecessor the Northeast Corridor Improvement Project, date back to 

the late 1970’s and represented a multiyear, multibillion collection of 

capital improvements to the Northeast Corridor that included electrifying 

the line between New Haven, Connecticut, and Boston, Massachusetts, 

improving tracks, signals, and other infrastructure, and acquiring highspeed trains.3

 These efforts were designed to achieve a 3-hour trip time 

between New York City and Boston. As of March 2003, Amtrak, commuter 

railroads, and others had spent about $3.2 billion on the project. 

In 1996, Amtrak executed contracts with train manufacturers Bombardier 

and Alstom to build 20 high-speed trainsets and 15 electric highhorsepower locomotives; construct three maintenance facilities; and 

provide maintenance services for the Acela trainsets. The trainsets, 

locomotives, and facilities contracts totaled $730 million.4

 Bombardier and 

Alstom, referred to as the Consortium, created the Northeast Corridor 

Management Service Corporation (NecMSC) to manage the facilities and 

maintain the trainsets, including supervising Amtrak maintenance 

employees. Amtrak pays NecMSC a per-mile rate—that is, a fixed rate for 

each mile the Acela trains travel—on a monthly basis to provide 

management and maintenance services at three maintenance facilities.5

Amtrak’s Acela program has undergone a number of events since its 

inception, which has included the execution of the original contracts in 

1996, delivery of the first trainset in October 2000, and the filing of 

lawsuits by both Bombardier and Amtrak in November 2001 and 2002, 

respectively(see fig. 1). The trainsets were also withdrawn from service for 

several weeks in August 2002. In March 2004, Amtrak and Bombardier 

signed an agreement to settle the lawsuits, which calls for Amtrak to 

conditionally assume trainset maintenance in October 2006, assuming 

conditions of the settlement have been met. The last warranties for the 

trainsets expire in 2021. 

 3

For a more detailed description and discussion of NHRIP and the Northeast Corridor 

Improvement Project, see GAO, Intercity Passenger Rail: Amtrak’s Management of 

Northeast Corridor Improvements Demonstrates Need for Applying Best Practices, 

GAO-04-94 (Washington, D.C.: Feb. 27, 2004). 

4

The cost of the Management Service Contract is not included in the total contract cost. 

5

As of April 2004, Amtrak had paid NecMSC a total of $31 million for its maintenance and 

management services. This amount is adjusted for liquidated damages Amtrak has assessed 

to NecMSC. 
Page 5 GAO-05-698T 

Figure 1: Timeline of key events 

Significant issues and controversy have impacted the Acela program since 

its inception. What started out as a relatively simple procurement of train 

equipment evolved into a complex high-speed rail program, according to 

an Amtrak official. The Acela trainset is a complex piece of equipment 

with state-of-the-art electronics and was considered new technology for 

the United States. As such, it required additional time to develop and test, 

and the probability of expected and unexpected problems was high. 

Among the issues that the Acela program has encountered since its 

creation are the following: 

• Potential difficulties due to new technology. Instead of purchasing “offthe-shelf” technology—that is, train equipment that was already designed, 

engineered, and in use—Amtrak decided to acquire “new” technology. An 

FRA official told us some components on the Acela trainset (such as 

Significant Issues 

Have Impacted Acela 

Program Since Its 

Inception 
Page 6 GAO-05-698T 

power components and the tilt mechanism6) were similar to that used on 

train equipment in other parts of the world but much of the technology on 

Acela trainsets was new. In addition, many of the components, whether 

new or existing technology, had never been used together. Further, this 

official said that because the components in the Acela trainsets had never 

before been designed as one unit, Acela was not an off-the-shelf 

technology train.7

 Although Acela trainsets were essentially new 

technology and could be expected to require additional time to develop 

and test, Amtrak developed an ambitious schedule that called for shipment 

of the first trainset 32 months—just over 21⁄2 years—after the notice to 

proceed was issued. According to an Amtrak official, the calendar and 

electrification delivery date drove the planning for the trainsets. Amtrak 

worked backwards from these due dates to try and fit project work into 

the timeline. 

• Impacts from new safety standards to accommodate high-speed rail. 

During the 1996 to 2000 time frame, the same time period when the Acela 

trainsets were being acquired and manufactured, FRA, in consultation 

with Amtrak, was developing safety regulations related to high-speed rail 

operations. These included new rules covering track safety (to 

accommodate speeds of up to 200 miles per hour), passenger car safety, 

and train control. According to FRA officials, Amtrak was intimately 

involved in developing these standards to accomplish its vision of highspeed rail operations on the Northeast Corridor. FRA officials also noted 

that passenger car safety regulations did not exist prior to the mid-1990’s. 

Developed for safety purposes, these standards had a significant impact on 

the Acela trainsets. For example, the passenger car safety regulations 

required a crash energy management system in passenger cars that was 

designed to increase the strength of both car ends and side posts. FRA also 

prohibited the operation of high-speed trains (up to 150 miles per hour) in 

a push-pull manner.8

 FRA officials acknowledged that the crash energy 

system increased the weight of the Acela trainsets but said such a system 

resulted in safer trains. Amtrak told us that prohibiting push-pull operation 

 6

This is a mechanism that allows trains to take curves at a higher speed. 

7

It should be noted that during 1993, existing high-speed trains such as the X-2000 and 

InterCity Express were tested on the Northeast Corridor. One of the bidders for the highspeed train contract proposed a slightly modified version of the X-2000 train but was not 

selected. 

8

Push-pull operation is when a locomotive “pulls” the train in one direction and then the 

locomotive “pushes” the train in the opposite direction. According to FRA, this is common 

in commuter rail operations. 
Page 7 GAO-05-698T 

caused them to obtain 20 additional power cars for Acela at a cost of 

about $100 million. 

• Manufacturing and production delays. The Acela program experienced a 

significant share of manufacturing and production delays. Under FRA’s 

1994 master plan for NHRIP, developed in response to the Amtrak 

Authorization and Development Act, delivery of enough high-speed trains 

to initiate limited 3-hour service between Boston and New York City was 

expected by 1999.9

 However, due to design and manufacturing delays, the 

first Acela trainsets were delivered about a year late, and revenue service 

using the trainsets did not begin until December 2000. Manufacturing and 

production delays began early in the procurement process. For example, 

our review of Consortium progress reports indicated that as early as 

October 1996, only months after the original contract was signed, change 

orders and design changes (mainly related to car interiors) were being 

made that were causing delays in production. In addition, train weight was 

increasing, a condition that continued to plague the trainsets throughout 

production. Amtrak attempted to require the Consortium to prepare 

recovery plans to keep the program on schedule, but we found little 

evidence of such plans in documents we reviewed. Regardless, these plans 

did not prevent the trainsets from being delivered about a year late. 

• Abbreviated testing prior to placement in revenue service. Amtrak’s Acela 

trainsets also appeared to have had abbreviated testing prior to being 

deployed into revenue service.10 A fuller testing of the trainsets may have 

better identified the range of potential problems and defects that could be 

experienced prior to placing the trainsets in service. The maximum testing 

any one Acela trainset received was about 35,000 miles of testing —20,000 

miles at the Transportation Test Center (Center) in Pueblo, Colorado, and 

15,000 miles on the Northeast Corridor between 1999 and 2000. However, 

an FRA official believed testing of the trainsets was rushed and that 

 9

As we reported in February 2004, Amtrak had not yet met the requirement for achieving 

the 3-hour trip time contained in the Amtrak Authorization and Development Act. See 

GAO-04-94. It should be noted that Amtrak did not agree with our use of FRA’s 1994 master 

plan to measure the effectiveness of its management of NHRIP, even though Amtrak 

officials had agreed that this plan was a “blueprint” for the project. 

10This discussion of Acela testing is not meant to imply that the trainsets are unsafe or do 

not meet federal safety standards. Rather, it focuses on the degree of testing to discover 

problems and defects that could potentially be fixed prior to deployment into revenue 

service. 
Page 8 GAO-05-698T 

additional testing at the Center should have been conducted.11 This official 

cited testing of Amtrak’s AEM-7 electric locomotive as an example of the 

testing that is normally done on new equipment. This locomotive, which 

was a new locomotive that entered service in the early 1980’s, was tested 

for 165,000 miles at the Center prior to placement in service. An FRA 

official also acknowledged that there were no minimum federal testing 

requirements for new high-speed trainsets, like Acela, only that such 

equipment comply with existing safety regulations.12 However, this official 

believed Amtrak was under both financial and time pressures to place the 

trainsets in service, in part because of delays in trainset production. 

Since placement into revenue service in 2000, the Acela has experienced a 

number of unexpected problems. One occurrence was in August 2002 

when Amtrak was forced to withdraw the trains from service to address 

unexpected equipment problems (yaw damper brackets). The trainsets 

were not returned to complete service until October 2002. According to 

Amtrak, this withdrawal cost the corporation a net $17 million in lost 

revenue. In April 2005, Amtrak once again experienced unexpected 

problems with the trainsets due to equipment problems (cracks in brake 

assemblies). Again, the trainsets have been withdrawn from service and 

Amtrak has stated that it may be months before the trains are returned to 

service. Although Amtrak is placing substitute equipment into service, it 

can be expected that there will be revenue loss as well as damage to 

Amtrak’s image. 

As the procurement proceeded, tensions grew between Amtrak and the 

Consortium. Concerns about the quality of the Consortium’s work and 

Amtrak’s withholding of payments for the Acela trainsets resulted in the 

parties suing each other, each seeking $200 million in damages. In 

November 2001, Bombardier filed a suit alleging that Amtrak improperly 

withheld payments, failed to provide accurate information on 

infrastructure conditions, and changed design specifications during 

contract performance. In November 2002, Amtrak filed a suit alleging that 

the Consortium failed to meet trainset performance requirements. In 

 11An FRA official acknowledged that the Center was not conducive to testing Acela’s tilt 

mechanism. However, he said that other problems that developed during testing at the 

Center should have been a clear signal that additional testing was warranted. 

12According to FRA, in lieu of high-speed testing standards, Amtrak developed its own 

minimum testing requirements. 

Legal Suits between 

Amtrak and the Acela 

Manufacturer Led to 

Settlement Agreement 

in March 2004 
Page 9 GAO-05-698T 

addition, Amtrak alleged that the engineering was deficient, workmanship 

was poor, program management and quality control were inadequate, and 

the Consortium did not meet contract delivery schedules. 

Amtrak and the Consortium reached a negotiated settlement in March 

2004, ending their legal dispute surrounding the Acela trainsets.13 As part 

of the settlement, Amtrak agreed to release a portion of the previously 

withheld funds to the Consortium and conditionally assume facility 

management and trainset maintenance responsibilities as soon as October 

1, 2006, rather than in 2013, as originally planned. In general, under the 

settlement, the Consortium must complete modifications to the trainsets 

and locomotives; achieve established performance requirements for 

reliability, speed, and comfort; provide training to Amtrak staff; and 

provide and extend warranties (see fig. 2). The Consortium is also 

responsible for the transfer of technical information, rights to third-party 

contracts, parts information, permits, and licenses to Amtrak. In addition, 

the settlement requires that the Consortium provide technical services and 

information technology updates even after the transition date. Amtrak is 

required to create a transition plan, hire staff to manage the facilities and 

maintain the trainsets, and determine a parts procurement plan for the 

trainsets. 

 13For a more detailed information on the lawsuits and settlement, see GAO-05-152. 
Page 10 GAO-05-698T 

Figure 2: Settlement responsibilities 

Independent of the Acela brake problem being discussed today, Amtrak 

faces other risks and challenges to sustain the trainset and keep it 

operating efficiently. Achieving a successful transition is critical to the 

financial well-being of Amtrak given that the Acela program is such a 

significant source of its revenue. A successful transition of maintenance 

and management responsibilities for the Acela trainsets depends on 

whether Amtrak and the Consortium can address the numerous 

challenges. Key challenges include: 

• Achieving trainset modifications and performance requirements. The 

Consortium must complete an extensive list of modifications to the 

trainsets, some of which are complex, before Amtrak will assume 

Acela Program Still 

Faces Considerable 

Challenges 
Page 11 GAO-05-698T 

maintenance responsibilities. Although the Consortium has closed threefourths of the items, they are behind schedule on completing the work on 

some remaining items. Amtrak has identified certain modifications that 

potentially may not be completed by October 1, 2006, and has concerns 

that other modifications may affect service reliability. The Consortium is 

also responsible for ensuring that the trainsets continue to meet reliability, 

speed, and comfort performance requirements. The trainsets have not yet 

met the minimum reliability performance requirement of traveling an 

average 17,500 miles between service failures.14 According to Amtrak, the 

period of time when the trainsets are out of service to resolve the brake 

problems will not likely be included in the measurement of this standard. 

• Obtaining technical expertise for maintenance and completing training. 

Amtrak must secure a workforce with the technical expertise needed to 

maintain the trainsets. To achieve this, Amtrak is developing a new High 

Speed Rail Division to assume management and maintenance 

responsibilities, and it plans to hire at least 50 percent of NecMSC’s 

current staff to benefit from their knowledge and expertise. The 

Consortium and Amtrak must also develop and implement training 

programs needed to maintain the complex trainsets after the transition. 

The trainsets are technically complex and require considerable expertise 

to identify and make needed repairs and to troubleshoot difficult 

maintenance problems. According to Amtrak officials, ensuring that 

technicians are properly trained is one of the most critical points of the 

transition. As a result of the current brake problem, Amtrak is reevaluating 

its training materials. Based on the latest progress report (March 2005), 

troubleshooting training is slightly behind schedule, and Amtrak officials 

told us that management training has been temporarily delayed due to the 

brake problem. Under the transition plan, training is scheduled to be 

completed by October 1, 2005. 

• Sufficiently funding maintenance and integrating responsibilities. Once the 

transition occurs, Amtrak will be responsible for maintenance costs to 

ensure continued trainset performance, including procuring parts and 

performing overhaul maintenance. Amtrak has experienced problems in 

the past with delays in completing the maintenance necessary to provide 

its conventional service; and if these problems continue, they could affect 

trainset performance and availability for revenue service. At the time of 

 14According to Amtrak, this measure is calculated as a 6-month rolling average. The 

settlement agreement requires the Consortium to meet this reliability standard before the 

transition will occur and Amtrak may draw down on letters of credit issued by the 

Consortium should it default and not meet the requirement. 
Page 12 GAO-05-698T 

our review, Amtrak had not determined the level of funding necessary to 

provide regular maintenance and overhauls to the trainsets. Amtrak 

officials stated that despite the uncertainty of maintenance costs once the 

transition occurs, they estimate that the costs of managing the 

maintenance in-house will be no greater than the costs of paying NecMSC 

to perform the work. We believe the uncertain amount of future 

maintenance costs and possible lack of adequate funds may have a greater 

impact than anticipated. Amtrak must also successfully integrate the new 

maintenance responsibilities into its current organization. Development of 

a new division requires strategic planning, communication, and 

performance management. This may prove difficult for Amtrak as our past 

and ongoing work has shown its shortcomings in managing large-scale 

projects. 

• Preparing a comprehensive implementation plan. Creating a 

comprehensive implementation plan that provides a blueprint of important 

steps; milestones; contingency plans if milestones are not met; measures 

for achieving results; and funding strategies will be important for a 

successful transition. Amtrak has created a critical path schedule for 

monitoring the status and completion of open items related to the 

settlement and holds regular meetings, both internally and with the 

Consortium, to discuss progress and issues that arise. Although Amtrak 

has taken actions to address the key challenges related to the settlement, 

these actions did not represent a comprehensive implementation plan, and 

we recommended in our December 2004 report that Amtrak develop such 

a plan that encompasses all aspects of the transition in order to ensure a 

successful transition. We also said that such a plan should include 

contingency plans, if milestones are not met. In light of recent events, we 

believe a comprehensive plan that identifies contingency actions could 

provide the steps necessary to help prevent postponement of the 

transition. Amtrak officials do not believe the current brake problems will 

impact the October 2006 transition date, however. 

Although the settlement agreement ensures that Amtrak will be protected 

by the extended trainset warranties and Amtrak has several methods of 

financial recourse, if the Consortium does not honor warranties, loss of 

revenue resulting from removal of trainsets from revenue service is not 

directly recoverable. For example, the settlement agreement included the 

extension of “bumper to bumper” trainset warranties on all trainsets for 

the next 5 months, until October 1, 2005. In addition, modifications to the 

trainsets that are currently under way or planned will be under warranty 

for 2 years after they are completed to Amtrak’s satisfaction. Amtrak also 

has several methods of financial recourse, if the Consortium does not 

honor warranties, including letters of credit that Amtrak may draw down. 
Page 13 GAO-05-698T 

However, the full extent of the legal liability associated with the April 2005 

brake problem has yet to be addressed by the parties. Amtrak officials told 

us that their first priority is getting the trainsets back in service. Amtrak is 

considering a number of possible actions regarding the brake problem, 

including assessing liquidated damages.15

As we reported in February 2004, Amtrak did not effectively manage the 

entire NHRIP project, of which Acela was a part.16 Among the problems we 

found were that (1) Amtrak’s management of this project was not 

comprehensive but was focused on the short term; (2) project 

management focused on separate components of the project, such as 

electrification and acquisition of the high-speed trains, and not the project 

as a whole; and (3) did not sufficiently address major infrastructure 

improvements needed to attain project trip-time goals. We also found that 

Amtrak lacked a comprehensive financial plan for the project and that 

Amtrak did not fully integrate stakeholder interests (commuter rail 

authorities and state governments), even though work that involved 

stakeholders was critical to achieving project goals. The overall results of 

this poor management was that many critical elements of the project were 

not completed, project costs and schedules increased considerably, and 

the project goal (3-hour trip time from Boston to New York City) was not 

attained. While there have been many benefits from the NHRIP, including 

faster trip times between Boston and New York City, Amtrak’s 

management of this project clearly demonstrates that Amtrak had 

difficulty keeping such a large-scale project focused, on-time, and onbudget. 

We also have ongoing work for this committee on Amtrak’management 

and performance issues that we plan to report on later this year. 

Mr. Chairman, that concludes my statement. I would be happy to answer 

any questions you or the Members of the Subcommittee might have. 

 15Amtrak officials said that, because the Acela trains have been removed from service, they 

are not currently paying NecMSC the fixed mileage rate for its services. 

16See GAO-04-94. 

Challenges In 

Managing Other 

Large-Scale Projects 
Page 14 GAO-05-698T 

For further information, please contact JayEtta Z. Hecker at 

heckerj@gao.gov or at (202) 512-2834. Individuals making key 

contributions to this statement include Kara Finnegan Irving, Bert Japikse, 

Richard Jorgenson, and Randall Williamson. 

Contacts and 

Acknowledgements 
Page 15 GAO-05-698T 

Intercity Passenger Rail: Issues Associated with the Recent Settlement 

between Amtrak and the Consortium of Bombardier and Alstom, GAO-05-

152 (Washington, D.C.: Dec. 1, 2004). 

Intercity Passenger Rail: Amtrak’s Management of Northeast Corridor 

Improvements Demonstrates Need for Applying Best Practices, GAO-04-94

(Washington, D.C.: Feb. 27, 2004). 

Intercity Passenger Rail: Amtrak Needs to Improve Its Decisionmaking 

Process for Its Route and Service Proposals, GAO-02-398 (Washington, 

D.C.: Apr. 12, 2002) 

Intercity Passenger Rail: Potential Financial Issues in the Event That 

Amtrak Undergoes Liquidation. GAO-02-871 (Washington, D.C.: Sept. 20, 

2002). 

Financial Management: Amtrak’s Route Profitability Schedules Need 

Improvement, GAO-02-912R (Washington, D.C.: July 15, 2002). 

Intercity Passenger Rail: Congress Faces Critical Decisions in Developing 

a National Policy, GAO-02-522T (Washington, D.C.: Apr. 11, 2002). 

Intercity Passenger Rail: The Congress Faces Critical Decisions About the 

Role of and Funding for Intercity Passenger Rail Systems, GAO-01-820T

(Washington, D.C.: July 25, 2001). 

Intercity Passenger Rail: Amtrak Will Continue to Have Difficulty 

Controlling Its Costs and Meeting Capital Needs, GAO/RCED-00-138

(Washington, D.C.: May 31, 2000). 

Intercity Passenger Rail: Issues Associated With a Possible Amtrak 

Liquidation, GAO/RCED-98-60 (Washington, D.C.: Mar. 2, 1998). 

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