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REVIEWING ALTERNATIVES TO AMTRAK’S ANNUAL 

LOSSES IN FOOD AND BEVERAGE SERVICE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 14, 2013 

Serial No. 113–76 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS

JOHN L. MICA, Florida, Chairman 

TIM WALBERG, Michigan 

MICHAEL R. TURNER, Ohio 

JUSTIN AMASH, Michigan 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

GERALD E. CONNOLLY, Virginia Ranking 

Minority Member 

JIM COOPER, Tennessee 

Vacancy 

(III) 

C O N T E N T S 

Page 

Hearing held on November 14, 2013 ...................................................................... 1 

WITNESSES 

Mr. Thomas J. Hall, Chief of Customer Services, National Railroad Passenger 

Corporation, Amtrak 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 7 

Mr. Ted Alves, Inspector General, Amtrak 

Oral Statement ................................................................................................. 11 

Written Statement ............................................................................................ 13 

Mr. Ed Howell, Senior Vice President of Retail, Smithsonian Enterprises, 

Smithsonian Institution 

Oral Statement ................................................................................................. 22 

Written Statement ............................................................................................ 24 

Mr. Paul Worley, Rail Division Director, North Carolina Department of 

Transportation Rail Division 

Oral Statement ................................................................................................. 26 

Written Statement ............................................................................................ 28 

Mr. Dwayne Bateman, Vice General Chairman, Unite-Here Local 43 

Oral Statement ................................................................................................. 34 

Written Statement ............................................................................................ 36 

APPENDIX 

Answers to Questions for the Record from Mr. Thomas Howard ........................ 68 

Answers to Questions for the Record from Mr. Thomas J. Hall .......................... 71 

(1) 

REVIEWING ALTERNATIVES TO AMTRAK’S 

ANNUAL LOSSES IN FOOD AND BEVERAGE 

SERVICE 

Thursday, November 14, 2013, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:38 a.m. in room 

2247, Rayburn House Office Building, the Honorable John L. Mica 

[chairman of the subcommittee], presiding. 

Present: Representatives Mica, Meadows, Cummings, and 

Connolly. 

Staff Present: Will L. Boyington, Majority Press Assistant; Molly 

Boyl, Majority Senior Counsel and Parliamentarian; Drew 

Colliatie, Majority Professional Staff Member; John Cuaderes, Majority Deputy Staff Director; Linda Good, Majority Chief Clerk; Michael R. Kiko, Majority Staff Assistant; Mark D. Marin, Majority 

Director of Oversight; Katy Rother, Majority Counsel; Laura L. 

Rush, Majority Deputy Chief Clerk; Sarah Vance, Assistant Clerk; 

Jaron Bourke, Minority Director of Administration; Beverly Fraser 

Britton, Minority Counsel; Courtney Cochran, Minority Press Secretary; and Adam Koshkin, Minority Research Assistant 

Mr. MICA. Good morning. 

I would like to call this hearing of the Committee on Oversight 

and Government Reform, Subcommittee on Government Operations, to order. Welcome everyone. 

The title of this morning’s hearing is ‘‘Reviewing Alternatives to 

Amtrak’s Annual Losses in Food and Beverage Service.’’ We have 

five witnesses and I will introduce them shortly. 

The order of business will be as follows. We will have opening 

statements by members and then we will turn to our witnesses, introduce them, swear them and each of them will provide us with 

their testimony today. 

Mr. Issa, our committee chairman, says, and I will paraphrase it, 

that our responsibility in the Oversight and Government Reform 

Committee is to be good stewards of taxpayer dollars and to make 

certain the hard earned tax dollars sent to Washington of the people we represent, particularly in a time of difficult financial deficits 

that are soaring in the United States that we are looking to how 

we can more efficiently, economically and responsibly deal with 

government programs that spend their money. 

2 

With that, I am going to recognize myself and other members as 

they join us and then we will get to our witnesses. 

To begin, I welcome everyone and thank our witnesses for being 

here. 

Today, we are going to review the results of an Amtrak IG report. This is not one our subcommittee requested but the Amtrak 

Inspector General, from time to time, does review operations. There 

have been several previous hearings in the Transportation Committee, Appropriations and others have looked at some of the losses 

Amtrak has incurred. One of the largest areas in which they have 

incurred losses is in food and beverage services. 

In addition to this report, Amtrak issued a press release in October stating they had a plan to deal with some of these losses and 

we will hear a little bit about that. 

As you may know, Amtrak’s losses continue to mount, not only 

for food and beverage services, but the Federal Government has 

had to underwrite the total operations of Amtrak last year in excess of $1.3 billion. During the last 12 years, Amtrak has lost nearly $1 billion in food service, so $999 million in losses in a dozen 

years. Unfortunately, those losses continue to mount. Last year, Amtrak reportedly lost $72 million on food and beverage services. Amtrak claims and testified before Congress some 

significant improvements have been made over prior years. If you 

look at Amtrak’s financial statements, it would appear Amtrak has 

reduced their losses as it claims by $33.2 million since 2006. 

In reality, if you look at this report and dig into their books, 

sometimes it is difficult to do that, you can see the reduction in 

losses they have claimed to Congress and the American public is, 

in fact, the result of an accounting gimmick. Amtrak, unfortunately, has cooked the books on food service costs. Since 2002, Amtrak has increased the amount transferred to the food and beverage 

service program from ticket revenue by $22.1 million. 

In fact, Amtrak has not actually saved any of that money; they 

just shifted money between accounts to make it look as if their 

losses are being significantly reduced. 

Another $1.2 million of the so-called savings is an increase in 

State subsidies. That does reduce some of Amtrak’s expenses. As 

you know, we also mandated in the PRIA legislation that States 

step up to the plate and be responsible for some of the cost of those 

routes. Those routes have been some of the most successful. 

Today, we will look at not only food service at Amtrak but at 

some successful examples. One of those is with the Smithsonian Institution that actually turns a profit. Speaking of the State supported routes, another area we will look at is the North Carolina 

food service where they have managed to dramatically reduce the 

amount of losses in food service and do so in a responsible fashion. 

In fact, in six years the reduction in losses that could possibly 

be attributable to the cost savings or revenue enhancing initiatives 

by Amtrak is less than $10 million. I am sure they will come before 

us today and tell you they are in a downward spiral on these 

losses. We do have reports that this year again we will see a spike 

in those losses, even using accounting gimmicks. 

On October 31, 2013, the Inspector General released the audit 

that identified an additional $10.5 million that may be saved from 

3 

incremental adjustments. Hopefully we will hear about those today. 

In the referenced report, there are some positive suggestions as to 

how we can bring down some of these losses. 

Beyond those incremental adjustments, the report concludes that 

additional savings will require significant changes to the current 

business model. I believe that makes sense. There have to be some 

dramatic changes to make some dramatic savings. 

When you start to look at where the losses occur, it is clear that 

significant changes need to be made in some very specific areas. 

Last year, $71.5 million of the $72 million in losses was directly attributable to losses in long distance service. Overall, Amtrak spent 

$1.50 to earn $1 in revenue on its food service. 

On its 15 long distance routes, Amtrak spent more than $2.00 to earn $1 in revenue in the same area. When you look at each of the 

long distance routes, some of the losses become even more startling. All but two routes spend more on labor than they earn in revenue. Six routes spend more on commissary costs than they earn 

in revenue. 

One of the most glaring examples of losses is the Sunset Limited 

which runs from New Orleans to Los Angeles. In the Transportation Committee, we focused on the cost of a ticket is subsidized, 

not talking about food service. Every ticket on Amtrak is subsidized about $40 per ticket, every one of the 30 million tickets sold 

last year. On the Sunset Limited, there is close to a $400 subsidy for every 

passenger ticket. The Sunset Limited also holds the record because 

it recovers less than 30 percent of its expenses to provide food and 

beverage services. It spends $3.50 for ever $1.00 earned in food 

service revenue. 

In the Sunset Limited chart, you can see a $9.75 hamburger is subsidized $24.19, an astounding amount. I believe every hamburger sold on Amtrak on average is subsidized around $7.00. All 

of these taxpayer subsidies for food service do add up. 

In terms of ridership, the Sunset Limited also has the highest 

losses on providing food service. For every passenger that rides the 

Sunset Limited route, the food service underwriting cost to the taxpayer is $55 per rider. This is astronomical. 

While every little bit helps, losses like this will not be recovered 

by reducing spoilage. We will have to make some major changes. 

I do not believe a five year plan is acceptable to zero out these 

losses. That is pretty simple. When you have a $17 trillion national 

deficit, when they are trying to up that debt limit to almost another $18 trillion, and look at the money we are spending and losing on Amtrak services, every dollar we are spending at the federal 

level, we are borrowing 43 cents. 

Again, I think this is an important issue, one that deserves the 

committee’s oversight and immediate attention. 

Mr. MICA. With those opening comments, I would like to recognize Mr. Meadows. 

Mr. MEADOWS. Thank you, Mr. Chairman. Thank each of you for 

coming today. Specifically, Mr. Worley, it is good to have you from 

my home State of North Carolina. 

This is indeed an important hearing as our Nation is looking at $17 trillion in debt, hundreds of billions of dollars annually in 

4 

terms of deficit. We need to make sure we are good stewards of federal tax dollars and represent the American people in a real way 

to minimize losses. 

Obviously the food and beverage service provided by Amtrak on 

our Nation’s railway right now is proving not to be a profitable 

market and the ability to provide those services. 

Early on when I got into the business of providing food service, 

I owned restaurants, a gentleman I respected very much said let 

me give you rule number one. If you are buying watermelons for 

$1.10 apiece, selling them for $1.00, do not try to make it up in volume. We really need to look at how do we redirect this model to 

make sure we can look at reforms, eliminate the waste and provide 

better management within the program to minimize losses, while 

at the same time still giving Amtrak the ability to provide services 

riders have grown to expect. 

Looking at specific examples in the private sector and changes in 

the public sector that other passenger railways like Piedmont have 

made in my own State of North Carolina is a good start to getting 

this program back on track. 

I look forward to hearing your testimony. I want to apologize to 

the committee staff who do an excellent job of preparing and to the 

Chairman. I have another hearing to go to but we will be providing 

some questions we would love to work with you on a regular basis 

to look at some of the reforms in a very bipartisan way to make 

sure we mitigate some of the losses and damages that are out 

there. 

Thank you and I yield back, Mr. Chairman. 

Mr. MICA. I thank the gentleman. 

Obviously folks can see we have some challenges with members 

and hearings. I have three hearings I am supposed to attend right 

now in addition to this one. This one will go on and we will complete it. When we have other Representatives, we will give them 

an opportunity for a statement and also for full participation in 

questioning. 

At this time, we will move forward and introduce our witnesses. 

We have Mr. Thomas J. Hall, Chief of Customer Services, National 

Railroad Passenger Corporation, Amtrak; Mr. Ted Alves, Inspector 

General, Amtrak; Mr. Dwayne Bateman, Vice General Chairman, 

Unite-HERE Local 43; Mr. Ed Howell, Senior Vice President of Retail, Smithsonian Enterprises, Smithsonian Institution; and Mr. 

Paul Worley, Rail Division Director, North Carolina Department of 

Transportation Rail Division. 

We thank all of our witnesses for being with us. 

This is an Oversight and Investigations subcommittee of Congress. We do swear in all of our witnesses. Stand please and raise 

your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Mr. MICA. Let the record reflect that the witnesses answered in 

the affirmative. 

5 

Again, I welcome each of the witnesses and thank you for your 

participation, especially the North Carolina witness who came from 

out of town, and the others here in Washington. 

With that, we will start with the Chief of Customer Services for 

Amtrak, Mr. Thomas Hall. 

I might say we will try to keep you to five minutes. If you have 

additional information or something you would like made part of 

the record of this hearing, please ask and we will include that in 

the record. 

Mr. Hall, you are recognized. 

STATEMENT OF THOMAS J. HALL 

Mr. HALL. Chairman Mica and members of the committee, good 

morning. 

My name is Tom Hall and I am Amtrak’s Chief of Customer 

Service. 

I have worked for Amtrak for 33 years running our food and beverage operations since 2005. I was appointed Chief of Customer 

Services earlier this year. It is an honor to be here this morning 

on behalf of Amtrak. 

I will start by summarizing the history of our food and beverage 

services since our 2005 testimony before the House T&I Committee. 

At the time, our performance needed improvement and the annual cost of providing food and beverage services exceeded revenue 

by a factor of two. In 2006, this amounted to a total loss of $88 million. This was problematic and Amtrak launched a program to further reduce our losses on dining car services. 

We took measures to reduce dining car staff and introduced new 

products which were less labor intensive and also introduced an onboard credit card collection system. We began development work on 

a point-of-sale system and an integrated warehouse inventory management system. We negotiated a better contract with our commissary providers and obtained even better terms when we rebid 

the commissary management contract. 

In 2011, Amtrak’s OIG recommended Amtrak pursue a program 

to implement cashless onboard transactions to minimize transaction costs, better utilize employee time and reduce the possibility 

of fraud. We have successfully piloted a point-of-sale system on 

Acela and certain State supported services. These systems are slated for system-wide introduction in 2014. This technology will allow 

us to pilot cashless sales next year. 

Last year, when we appeared before the House T&I Committee 

to testify about food and beverage, we had made considerable 

progress. In inflation adjusted dollars, Amtrak reduced its food and 

beverage losses by over 30 percent between 2006 and 2012 from 

$105 million in inflation adjusted dollars to $72 million. 

The total cost to Amtrak to offer food and beverage services to 

our passengers is about $204.9 million or just over 8 percent of our 

total cost structure. Of that, we have recovered almost 65 percent 

of our costs through revenues in fiscal year 2012 meaning that the 

loss attributable to food and beverage services is equal to about 1.8 

percent of all of Amtrak’s costs. 

6 

These improvements did not happen by accident. Some are the 

product of ridership growth, some are the product of better support 

contracts, better technologies and more efficient processes. We have 

also introduced more consumer relevant products, optimized the 

supply chain and improved decision support from taking appropriate pricing actions, all designed to improve customer service, 

promote accountability and increase the focus on Amtrak’s bottom 

line. 

We are now developing plans for the next step which is elimination of the food and beverage loss over the next five years. Amtrak’s strategic plan focuses on the bottom line. Our food and beverage plan is consistent with this strategy. To ensure proper management focus, we have consolidated responsibility for operations 

and accountability for financial performance into a single department which will work closely with each of our business lines. 

The current loss is heavily concentrated in the dining car services of our long distance trains and we have identified several 

strategies that will help us to improve the financial performance of 

the food and beverage service. They fall into six broadly defined 

categories of work: onboard logistics, product development and supply chain, labor optimization, training, rewards and accountability, 

ticket revenue allocation, technology enhancements and process improvements. 

In each category, specifically identified strategies will help cut 

costs and raise revenue. For example, labor optimization includes 

aligning dining car staffing with ridership, customer demand and 

financial performance to hold down cost. We will also improve sales 

and the revenue generation by establishing metrics to assess and 

incentivize employee sales while exploring new pricing and revenue 

management options. 

Many of our approaches will expand an ongoing work. Implementation of onboard technologies is underway and is expected to improve revenue recovery and improve decision support while greatly 

reducing costs. 

I want to conclude by saying simply that the food and beverage 

service program is vital to Amtrak’s health. We believe we have a 

mission to minimize the impact on the taxpayers while providing 

an efficient and effective intercity passenger rail service on the national system. A unified food service operation with economies of 

scale is a component of that system. 

Food service is necessary and studies have shown that the elimination of food service on Amtrak trains would cost more in terms 

of ticket revenue than is spent on the existing service. We nevertheless recognize the importance of getting the food and beverage 

loss to zero and are committed to making this necessary efficiency 

improvement within the next five years. 

Thank you. 

[Prepared statement of Mr. Hall follows:] 

7 


Insert offset folio 1 here 86721.001

Good MOl11ing, Chail111an Mica. and members of the Subcommittee. 

My name is Thomas Hall, and I am Ann'ak's Chief of Customer Service. I have worked 

for Amtrak for 33 years, running our food and beverage services since 2005. I was appointed 

Chief of Customer Service earlier this year. I would like to start by summarizing for the 

members of the Committee some of the recent history of our food and beverage sen'ices. In 

2005, Amtrak provided testinlOny on our food and beverage operations before the Honse T &1 

committee. At the time, our performance was problematic. Amtrak orG and the GAO had 

studied the operation, and found that the aunual cost of providing food and beverage service 

exceeded revenues by a factor of 2; in 2006, this total amounted to a net loss of $88 million. 

This was a problem, and Amtrak launched a program to reduce our food and beverage loss. We 

reduced staffing levels in dining cars and introduced new products which were less labor 

intensive. We introduced onboard credit card systems and began development work on "point of 

sale" and warehonse inventory management systems. We negotiated a better contract with our 

commissary contractor, and then obtained even better terms when we re-bid the commissary 

management contract. 

In 20 11, Amtrak. orG recommended Amtrak pursue a program to implement cashless 

onboard transactions, to minimize transaction costs, better utilize employee time, and reduce the 

possibility of fraud. The full Point of Sale system is slated for system wide introduction in 2014 

and cashless sales will be piloted shortly thereafter. Last year, when we appeared before the 

Honse T &1 Committee to testify about food and beverage, we had a story that highlighted the 

considerable progress we have made. Amtrak. reduced its food and beverage loss by over 30% 

between 2006 and 2012, from $105 million in inflation-adjusted dollars to $72 million. The total 

2 
8 


Insert offset folio 2 here 86721.002

cost to :\mtrak to offer food service to our passengers is about $204.9 million, or just over 8% of 

our total cost structure. Of that, we recoYel'ed almost 65% of our costs through revenues in FY 

20 J 2 - meaning that the loss attributable to food service is equal to about 1.8% of all the costs 

the company incurred. 

We operate more than 300 trains in 46 states each day, and in addressing this problem we 

knew one solution would not fill all needs. Our improvement was achieved through a number of 

actions. Some of it is a product of ridership growth; some of it is a product of better support 

contracts, better technologies, and more efficient processes. Amtrak introduced more consumerrelevant products, optimized the supply chain, improved decision support and pricing actions. 

All of this is a product of a gradual process of transformation that is designed to improve 

customer service, promote accountability, and increase the focus on Amtrak's bottom line. 

We are now in the process of completing the plans for the next step, which is the 

elimination of the food and beverage loss over the next five years. Amtrak has been working to 

implement a strategic plan that will improve our focus on the bottom line, the elimination of the 

food and beverage loss is consistent with this strategy. To ensure the proper management focus, 

we have this past summer consolidated responsibility for operations and accountability for 

financial performance into a single department. The current loss is heavily concentrated in the 

dining car services of our long distance trains, and we have identified several strategies that will 

help us to improve the financial performance of our food and beverage service. They fall into six 

broadly defined categories of work: 

• On-Board Logistics 

3 
9 


Insert offset folio 3 here 86721.003

Product Dewlopmen; and Supply Chain 

• Labor Optimization 

• Training, Rev,rards, and Accountability 

• Ticket Revenue Allocation 

• Technology Enhancements and Process Improvements 

In each category, specifically identified strategies will help us to cut costs or raise 

revenue. For example, "labor optimization" includes two approaches: first, seeking to ensure 

that staffing is aligned with ridership, customer demand and financial performance on each route; 

this ensures that costs are minimized where they can be, while ensuring that we employ 

sufficient staff to meet demand and satisfy customers. That's the cost savings aspect; we will 

also seek to improve sales and the revenue generation of food service cars. We are working now 

to establish metrics to assess employee sales, improve stock tracking, and exploring new pricing 

and revenue management options. Many of our approaches allow us to expand on work that is 

already ongoing. Implementation of onboard technologies is now underway, and is expected to 

improve revenue recovery and provide improved decision support, while greatly reducing the 

amount of time employees are required to spend performing unprofitable inventory tasks. 

I want to conclude by saying simply that a strong and viable food service program is vital 

to Amtrak's health. We believe we have a mission to minimize our impact on the taxpayer, 

while providing an efficient and effective intercity passenger rail service on the national system. 

We live in a very competitive transportation market, and one of our advantages is the ability to 

provide some amenities - things like freedom of movement, city-center service, and the ability to 

buy food when you want it Taking this away would hurt our competitiveness and reduce our 

4 
10 


Insert offset folio 4 here 86721.004

appeal to the customer, panicularly the long distance customer. Smdies hayc shown that 

elimination of the food and bcycrage services on Amtrak trains would cost more in tenus of 

revenue than is spent on the existing seTyice. We neyeliheless recognize the importance of 

getting the food and beverage loss to zero, and we are committed to making this necessary 

efficiency improvement ,.,,[thin the next five years. 

5 
11 

Mr. MICA. Thank you. We will hold questions until we have 

heard from everyone. 

We will now hear from the Inspector General of Amtrak. Welcome and you are recognized. 

STATEMENT OF TED ALVES 

Mr. ALVES. Good morning, Chairman Mica, Ranking Member 

Connolly and members of the subcommittee. 

Thank you for the opportunity to discuss Amtrak’s food and beverage service. My testimony today will focus on Amtrak’s progress 

reducing losses and opportunities to further reduce losses by improving business practices, processes and management information. 

Losses in Amtrak’s food and beverage service have been a longstanding issue and almost all of the losses were on long distance 

routes. Over the last several years, Amtrak has taken a number of 

steps to reduce food and beverage losses by increasing revenue and 

reducing costs. These steps have trimmed losses by $33 million 

since fiscal year 2006. Nonetheless, losses were $72 million in fiscal year 2012. Our October 2013 report identified additional opportunities to improve 

business processes which we conservatively estimate could reduce 

losses by at least $10.5 million per year. 

For example, in fiscal year 2012, aligning onboard staffing with 

seasonal changes in ridership on long distance routes would have 

reduced costs by about $7 million. Increasing the sales performance 

of lead service attendants by just 1 percent would have generated 

$1.6 million in additional revenue. 

Shortening reporting times for onboard service personnel on 

three long distance routes would have reduced labor costs by about 

$100,000. Charging passengers for complementary items would 

have saved $700,000. 

We also noted that the lack of complete and accurate cost and 

revenue data hinders manager’s ability to improve performance. 

We also reported that contracting out food and beverage services 

could offer significant benefits but also comes with complex workforce and financial implications. 

Other railroads have reduced costs by contracting out food and 

beverage services. Although their operations are not directly comparable to Amtrak’s, they are generally similar and can provide 

useful information about alternative business models. 

The Downeaster, Alaska Railroad and the Rocky Mountaineer all 

contract with third parties to provide food and beverage services. 

Labor rates under these contracts are significantly lower than Amtrak’s. For example, in fiscal year 2012, hourly labor rates for contracted cooks on the Rocky Mountaineer averaged about $15 including limited benefits, while Amtrak’s onboard employees averaged about $41 including full benefits. 

It is important to note that this fundamental change to Amtrak’s 

business process would be complex and would involve significant 

risks. Consequently, this option should be approached in a structured, methodical manner to consider the number of factors including first the benefits that could be achieved by implementing process improvements such as those we have identified before contracting out. This is a best practice step often applied in order to 

12 

ensure that the benefits of efficiency improvements go to the entity 

rather than the contractor. 

Second is the applicability of various railroad labor statutes. 

Third is the safety and security responsibility of onboard food and 

beverage personnel. Fourth is the likelihood and consequences of 

labor unrest. 

In closing, we are encouraged that Amtrak agreed with the spirit 

of our recommendations and has committed to prepare a plan that 

will lead to eliminating food and beverage losses over five years. I 

believe this aggressive goal demonstrates that Amtrak is taking 

this issue seriously. 

In order to achieve its ambitious goal, Amtrak will need a well 

developed plan that includes clear organizational accountability, 

year by year actions and loss reduction goals, metrics to measure 

progress and a sustained management commitment. 

Mr. Chairman, this concludes my remarks. I would be glad to answer any questions the committee has. 

[Prepared statement of Mr. Alves follows:] 

13 


Insert offset folio 5 here 86721.005

Suhcommirh'e C01'Crnmcllt O!,lcrariOiIS. 

em 01'crs(f!:h! &- Gm'tT/1fIlcnt Rcjhnn 

J-lOlfS'C (~(R('Pr(,S(!Il[ari\'{.;s 

Statement of Ted Alves 

Inspector Genera! 

National Railroad Passenger Corporation 

November 14, 2013 

9:30 a.m. EST 

OIG· T·2014·002 
14 


Insert offset folio 6 here 86721.006

Good Moming Chairman Mica, Ranking Member Connolly, and Members of the 

Subcommi ttee: 

Thank you for the opporhmity to discuss Amtrak's food and beverage service. My 

testimony today will focus on two areas: 

1. Amtrak's progress in reducing losses, and 

2. Opporhmities to further reduce losses by improving business practices, 

processes, and management information 

In summary, losses on Amtrak's food and beverage service have been a long-standing 

issue. From fiscal year (FY) 2006 through FY 2012, the food and beverage service 

incurred direct operating losses of more than $609 million. The overwhelming majority 

of the losses were incurred on its long-distance routes. 

We recognize that it is a significant challenge to provide efficient and cost-effective food 

and beverage services across a nationwide passenger rail system with varying route 

lengths and 24/7 operations. To successfully meet that challenge, it is important that 

Amtrak consider fundamental changes in its management of the food and beverage 

service. 

Over the last several years, Amtrak has taken actions to reduce food and beverage 

losses. Nevertheless, in FY 2012, losses still totaled $72 million. In our most recent 

report, we-identified a number of opportunities to improve the efficiency and costeffectiveness of the food and beverage service, including improving business processes 

and developing better business management data. Also, outsourcing certain food and 

beverage services could significantly reduce labor costs, but has complex workforce and 

financial implications. The corporation agreed with the spirit of our recommendations 

and announced in October 2013 that it is developing a five-year plan to eliminate food 

and beverage losses. 

We are encouraged by this commitment, but recognize that promised actions alone 

cannot substitute for results. Without a well-documented plan that includes clear 

organizational accountability, year-by-year loss reduction goals and metrics, and a 

sustained management commitment, Amtrak will not likely achieve the results it seeks. 

We will monitor the corporation's progress developing and implementing the plan. 
15 


Insert offset folio 7 here 86721.007

$120.0 

Source: Finance department, Food 

Note: All figures are reported in 

Beverage 

dollars. 
16 


Insert offset folio 8 here 86721.008

As shown in Table 1, about 99 percent of FY 2012 food and beverage losses 

($71.5 million) came from long-distance routes; labor costs were the key driver of the 

losses. For example, on 13 of Amtrak's 15 long-distance routes, labor costs alone 

exceeded the revenue for food and beverage service. 

Table 1. Reported Food and Beverage Direct Operating Loss, 

FY 2012 (dollars in millions) 

Direct Costs 

Food and Total 

Beverage Onboard Direct Profit! Percentage 

Routes Revenue Labor Commissary Costs Loss of loss 

Northeast 

Corridor $36.5 $19.0 $16.7 $35.7 $0.8 -1% 

Statesupported 32.9 19.0 15.2 34.2 (1.3)" 2 

Longdistance 63.5 75.3 59.8 135.0 (71.5) 99 

Total $132.9 $113.2 $91.7 $204.9 ($72.0) 

Source: Amtrak Fmance department, Food and Beverage Marketing Report for FY 2012. 

Note: Numbers do not all add to totals due to rounding. 

100% 

• Food and beverage operating losses on state-supported routes came from the routes where Amtrak 

provided services that are not subsidized by the states. The Passenger Rail Improvement & Investment 

Act of 2008 directed equal treatment.of the states by October 16, 2013. 

Amtrak achieved its reported reductions in losses from FY 2006 through FY 2012 as a 

result of revenue increases and efficiency improvements that reduced costs. The 

revenue increases came from the following sources: 

• Food and beverage revenue transfers from sleeper class on long-distance routes 

and Acela first-class tickets increased by $22.1 million. 

• Onboard cash and credit card sales increased $8.9 million on all routes. 

• Subsidies from state-supported routes, which Amtrak counts as revenue, 

increased by $1.2 million, from $9.7 to $10.9 million. 

In addition, Amtrak took actions to reduce costs: 

• In October 2008, Amtrak awarded a new contract for food and beverage service 

warehouse management that included greater volume discounts and incentives 

to control costs. As a result, from FY 2006 through FY 2012, commissary costs 

decreased by $4.5 million. 
17 


Insert offset folio 9 here 86721.009

• Starting in fall 2011, Operations department officials began implementing 

staffing efficiencies, such as reducing reporting times for onboard staff on 

selected long-distance routes. Although labor costs decreased by $6.2 million in 

the first full year after implementing these efficiencies, oyerall labor costs 

increased by $3.6 million from FY 2006 through FY 2012.' 

To enhance the management of the food and beverage services, the corporation 

consolidated previously dispersed responsibilities for food and beverage activities into 

the Operations department. Although this was a positive step, three offices in 

Operations still have food and beverage responsibilities and separate reporting chains 

to the Vice President, Operations. As a result, accountability for improving financial 

performance remains split among the three, leaving final accountability with the Vice 

President, Operations. 

4 

In addition, our previous reports have documented long-standing internal control 

weaknesses and gaps in the onboard food and beverage service. In a June 2011 report, 

we estimated that $4 million to $7 million of Amtrak's onboard food and beverage sales 

could be at risk of theft.2 The report identified limited oversight on some routes and a 

number of recurring employee schemes to steal revenues and inventories. Examples 

include inflating first-class meal checks, selling non-Amtrak items for cash, shorting 

cash register sales, stealing inventory, and providing items at no cost. In response to our 

recommendations, the corporation has established a loss-prevention unit and also plans 

to establish a pilot project for cashless food and beverage sales in early 2014. 

Additional Business Process Changes Provide Opportunities to 

Reduce Losses 

Our October 2013 report identified a number of opportunities to improve business 

practices, processes, and management information.3 

1 A portion of these increases resulted from a 2010 labor agreement, which provided guaranteed wage 

increases for food and beverage employees. 

2 Food and Beverage Service: Further Actions Needed to Address Revenue LOsses Due to Control Weaknesses and 

Gaps, Report No. E-ll-03, june 23, 2011. 

3 Food and Beverage Service: Potential Opportunities to Reduce Losses, Audit Report 0IG-A-2014-001, October 

31,2013. 
18 


Insert offset folio 10 here 86721.010

Opportunities to Improve Existing Model 

Our report identified six opportunities to improve business practices and processes, 

which we conservatively estimate haye the potential to reduce losses by at least 

$10.5 million annually-and probably much more, depending on how they are 

implemented. Based on our work, we belieye that Amtrak can capitalize on most of 

these opportunities in the near- to medium-term. 

1. Align staffing of dining cars to ridership. When staffing dining cars, route 

managers are not required to consider seasonal changes in customer demand, 

which results in unnecessary labor costs. We estimate that aligning onboard 

staffing on 13 long-distance routes with seasonal changes in ridership could have 

reduced costs by about $6.9 million in FY 2012. 

2. Monitor and manage the sales performance of lead service attendants. The 

amount of revenue generated by different lead service attendants on the same 

routes varies widely, which suggests an opportunity to earn more by using 

performance monitoring tools and employee incentives. Increasing the sales 

performance of these employees by just one percent in 2012 would have 

generated $1.6 million. Amtrak is developing a report for managers to monitor 

the sales performance of lead service attendants. 

3. Shorten reporting times for onboard service personnel. Each long-distance 

route manager determines reporting times based on operational needs. As a 

result, the times vary from one to five hours before the train's scheduled 

departure. On the three long-distance routes we traveled, shortening the time 

period could reduce labor costs by about $100,000 annually. 

4. Align service to the needs of each route. Route managers retain their base 

dining car service year-round for the duration of each long-distance trip 

regardless of customer demand. Our analysis identified opportunities to align 

food and beverage service with variations in ridership, customer demand, and 

financial performance. These include amending or eliminating the sit-down 

dining car service seasonally on selected routes or on portions of some routes. 

5. Ensure that the cost of complimentary items is recovered. The Auto Train offers 

passengers complimentary wine and cheese, and three long-distance routes 

provide complimentary wine and champagne to sleeper car passengers. In 

FY 2012, this practice cost Amtrak $428,000. In addition, employee pass riders 

travelling for free consumed about $260,000 in complimentary meals on the Auto 

Train in FY 2012. Amtrak can increase revenues and thereby decrease losses by 

charging passengers for these items. 
19 


Insert offset folio 11 here 86721.011

6. Reduce spoilage. The food spoilage rate of the Great Southem Rail in Australia 

is 5 percent; Amtrak's is 8.3 percent. We identified a number of causes for 

spoilage, including high onboard stock leyels and excessive backordering. The 

Downeaster, a state-supported Amtrak route, reduces spoilage by reducing the 

price of food that approaches its expiration date at the end of trips. Selling food 

approaching its expiration date would increase revenue. Reducing spoilage to 

the level of the Great Southern Rail could save more than $1.2 million annually. 

Improved Business Performance Information Needed for Effective Management 

We also found that the food and beverage accounting process lacks the capability to 

generate the information needed to efficiently and effectively operate the service. For 

example, route managers lack labor cost and revenue data by train and departure date, 

as shown in Table 2. 

Table 2. Availability of Food and Beverage Financial Data by 

Operational Level 

Operational Level Revenues Costs 

Labor 

Wages Labor 

& Benefits Support" 

System-wide Available Available Available 

RouteC Available Available Available" 

Available, 

but not 

calculated by 

Train, by departure Limited departure 

dated Availability date Available" 

Food Service Car, Limited 

by departure date Availability Unavailable Available" 

Source. Amtrak OIG analYSIS of Amtrak data and offiCials statements 

Notes: 

Food 

Available 

Available 

Available 

Available 

a Crew meals, crew hotels, uniforms, training, and some crew base costs 

b Actual food costs are tracked and available for each of the 11 commissaries. 

C There are 44 different routes (not including special trains). 

d More than 300 trains operate each day. 

" These costs are allocated. 

f These costs are allocated based on the number of trains served by each commissary. 

Commissary 

Availableb 

Available! 

Available! 

Available! 

Amtrak's systems do not have the capability to track this data. To achieve profit-andloss accountability for the service, cost and revenue data must be more complete and 

6 
20 


Insert offset folio 12 here 86721.012

7 

accurate. In addition, Amtrak's accounting process lacks the capability to generate 

needed business information-such as the time of indiyidual sales. TI,e lack of this data 

hinders the ability of managers to align staffing with customer demand. 

Contracting Could Offer Significant Benefits, but Has Complex Workforce and 

Financial Implications 

To achieve a more significant impact on financial performance, Amtrak may require a 

completely different business model. As we reported, contracting out food and 

beverage services offers the greatest potential for cost reductions; nevertheless, this 

change to the business process would be complex and risk-prone. Consequently, this 

option should be approached in a structured, methodical manner. 

Leading organizations consider it a best practice to pilot new programs and ideas to 

determine the costs and benefits of a new approach. In addition, when considering the 

outsourcing of activities, best practices organizations first ensure that their business 

processes use the most efficient and effective approach for conducting the activity. 

Otherwise, the cost of outsourcing could be higher than necessary, and much of the 

subsequent efficiency gains could benefit only the contractor-not the organization. 

Clearly, Amtrak's business processes are not optimized so there are significant 

efficiencies to be gained from process improvements. 

Amtrak also would need to consider other qualitative and quantitative factors. The 

quantitative factors include the applicability of various railroad labor statutes-such as 

the Railroad Retirement Act, the Federal Employers' Liability Act, and the Railroad 

Unemployment Insurance Act. Amtrak must also weigh certain qualitative factors, such 

as the safety and security responsibilities of onboard personnel, and the possibility of 

labor unrest. Further, a contractor would likely have to obtain its own liquor licenses, 

which cost Amtrak about $88,000 a year-not including the administrative costs to 

research state and local laws and navigate the application and approval process in 

multiple jurisdictions. 

Other railroads have tried this approach successfully. Although these models do not 

provide a direct comparison to Amtrak's food and beverage service, they are generally 

similar. As such, they can provide useful information for identifying and considering 

ways to reduce food and beverage losses. For example, the Downeaster, Alaska 

Railroad, and the Rocky Mountaineer contract with third parties for all or nearly all of 

their food and beverage service. 
21 


Insert offset folio 13 here 86721.013

On all three railroads, labor rates for food and beverage persOImel are significantly 

lower than Amtrak's. According to Downeaster and Alaska Railroad officials, hourly 

labor rates for contracted staff, including serTers and cooks, ranged from $7.75 to 

$13.00, with no employee benefits. In FY 2012, hourly labor rates for contracted cooks 

on the Rocky Mountaineer averaged $14.70, including limited benefits. In contrast, 

Amtrak's onboard employees were paid an average of $41.19 per hour in FY 2012, 

including full benefits.4 

What We Recommend 

Since we reported on potential improvements to the food and beverage service in 2011, we 

have made various recommendations to the President and Chief Executive Officer, and the 

Vice President, Operations, to improve the efficiency and effectiveness of food and 

beverage services. 

In September 2012, we recommended the development of a five-year plan for reducing 

direct operating losses and emphasized the need to improve program accountability. In 

October 2013, we recommended developing improved financial and business management 

data, piloting various options to increase efficiency, and piloting contracting out food and 

beverage services on selected routes. In commenting on both of our reports, Amtrak agreed 

with the spirit of our recommendations and agreed to take actions, such as the 

development of a five-year plan, with a goal to eliminate food and beverage losses. We will 

continue to monitor Amtrak's progress addressing our recommendations and report as 

appropriate. 

Mr. Chairman, I thank the Committee for your interest in our work. This concludes my 

testimony, and I welcome your questions. 

4 The labor rate is based on the average hourly rate plus hourly benefit rate for the highest wage position 

(lead service attendant) and lowest wage position (service attendant). Amtrak benefits include medical 

insurance, railroad retirement, post-employment benefits, dental insurance, disability insurance, life 

insurance, unemployment, railroad workers compensation, and administrative fees. The Rocky Mountaineer's 

benefits include only medical insurance. 
22 

Mr. MICA. Thank you. We will withhold questions. 

Mr. CONNOLLY. May I ask one question, Mr. Chairman? Where 

is Mr. Alves from? 

Mr. ALVES. I am from Boston. 

Mr. MICA. We will hear the rest of the witnesses and then yield 

five minutes or whatever time you need for an opening statement 

before we get to questions. 

I now want to hear from Mr. Ed Howell, Senior Vice President 

of Retail at Smithsonian Enterprises. I want to hear from him first 

and then we will finish up because I want to hear a couple of success stories. Go ahead. 

STATEMENT OF ED HOWELL 

Mr. HOWELL. Chairman Mica, Ranking Member Connolly and 

members of the committee, thank you for inviting me to testify at 

this hearing. 

The Smithsonian Enterprises is a division of the Smithsonian Institution, the world’s largest museum and research organization, 

established in 1846 with bequests from English scientist, James 

Smithson. 

The Smithsonian currently encompasses 19 museums and galleries, the National Zoo and nine research centers. The Smithsonian has facilities in seven States, the District of Columbia, the Republic of Panama and over 6,000 employees. We conduct research 

in more than 100 countries. 

Smithsonian Enterprises operates retail, media, product development, licensing and other services that promote the Smithsonian 

mission while generating essential, unrestricted funding for the Institution. These include museum stores, theaters, restaurants and 

cafes, mail order and online catalogs, book publishing, an awardwinning television channel and an award winning magazine. 

By providing products and services that draw from the Smithsonian collection and the research and scholarship of our curators 

and scientists, Smithsonian Enterprises plays a critical role in advancing the Institution’s mission, the increase and diffusion of 

knowledge. 

Smithsonian Enterprises is self sustaining. It does not receive 

federal appropriations. The Smithsonian offers food services in nine 

museums and the National Zoo. These consist of restaurants, cafes 

and food carts operated by three independent contractors known as 

concessioners. Smithsonian Enterprises oversees the concession 

contracts at the museums and the Friends of the National Zoo, 

FONZ, oversees the concession contract at the National Zoo. 

Concessioners pay the Smithsonian a percentage of their sales 

and are responsible for hiring and managing food service staff, purchasing all food supplies and meeting performance standards established by their contracts. The Smithsonian is proud of the variety 

of food that is served at our museums and the Zoo. 

The Smithsonian food service provides food and beverage to approximately 20 percent of our 30 million visitors each year. The variety of offerings range from a hamburger and fries to cedarplanked salmon cooked on an open fire pit at the National Museum 

of the American Indian. The menu is designed to appeal to children, families and adults from the United States and abroad. 

23 

If you have any questions, I would be pleased to answer them. 

Thank you. 

[Prepared statement of Mr. Howell follows:] 

24 


Insert offset folio 14 here 86721.014

Testimony of Ed Howell 

Senior Vice President of Retail. Smithsonian Enterprises 

Before the U.S. House of Representatives 

Committee on Oversight and Government Reform 

Subcommittee on Government Operations 

November 14. 2013 

Chairman Mica. Ranking Member Turner. and Members of the Committee. thank you for inviting 

me to testify at this hearing. 

Smithsonian Enterprises is a division of the Smithsonian Institution. the world's largest museum 

and research organization. Established in 1846 with a bequest from English Scientist James 

Smithson, The Smithsonian currently encompasses 19 museums and galleries, the National 

Zoo. and nine research centers. The Smithsonian has facilities in seven states, the District of 

Columbia, and the Republic of Panama, and over 6,000 employees. We conduct research in 

more than 100 countries. 

Smithsonian Enterprises operates retail, media, product development, licensing and other 

services that promote the Smithsonian mission while generating essential unrestricted funding 

for the Institution. These include museum stores, theaters, restaurants and cafes, mail order 

and online catalogues, book publishing, an award-winning television channel and an awardwinning magazine. By providing products and services that draw from the Smithsonian's 

collections and the research and scholarship of our curators and scientists, Smithsonian 

Enterprises plays a critical role in advancing the Institution's mission: the increase and diffusion 

of knowledge. Smithsonian Enterprises is self-sustaining; it does not receive federal 

appropriations. 

The Smithsonian offers food services in nine museums and the National Zoo These consist of 

restaurants, cafes, and food carts operated by three independent contractors, known as 

concessioners. Smithsonian Enterprises oversees the concession contracts at the museums 

and Friends of the National Zoo (FONZ) oversees the concession contract at the National Zoo. 

The concessioners pay the Smithsonian a percentage of their sales. The concessioners are 

1 
25 


Insert offset folio 15 here 86721.015

responsible for hiring and managing food service staff, purchasing all food and supplies, and 

meeting performance standards established in their contracts. 

The Smithsonian is proud of the variety of food services offered at its museums and the Zoo. 

The Smithsonian food services provide food and beverage to approximately 20% of our 

30,000,000 visitors each year. The variety of offerings, ranging from a hamburger and fries to 

cedar-planked salmon cooked over an open fire pit at the National Museum of the American 

Indian, is designed to appeal children, families, and adults from the U.S. and abroad. 

I am happy to answer any questions. Thank you. 

2 
26 

Mr. MICA. We will get back to you with questions. 

Now we will go to Mr. Paul Worley, the Rail Division Director, 

North Carolina Department of Transportation, Rail Division. You 

are recognized. 

STATEMENT OF PAUL WORLEY 

Mr. WORLEY. Chairman Mica, Ranking Member Connolly and 

members of the subcommittee, I am pleased to have the opportunity today to come before you and discuss North Carolina’s Statesupported intercity passenger rail program, our Piedmont and Carolinian services and use of vending machines to provide food service aboard most of our trains. 

I am Paul Worley, Rail Division Director with North Carolina 

Department of Transportation. 

We began operation of the North Carolinian passenger train 

service in May of 1990 using Amtrak-owned equipment. This route 

operates between Charlotte, Greensboro-Raleigh, Washington and 

New York. 

In May 1995, the State-supported Raleigh to Charlotte Piedmont 

was added. Amtrak equipment was not available for this service, 

so NCDOT acquired its own rehabbing used coaches and locomotives for half the cost of new equipment. 

Both services have enjoyed tremendous success. Over the past 

ten years, ridership on the Piedmont service has grown from just 

under 40,000 riders in 2003 to over 170,000 riders in 2013. A second daily round trip was added in June 2010. 

Our inner city rail passenger service has evolved as we improved 

safety, rail infrastructure and reduced travel times. For the first 

seven years of the Piedmont service, 1995–2002, NCDOT offered a 

traditional cafe hot food and beverage service. The car was staffed 

with one full-time employee of a private sector food and beverage 

service contractor. NCDOT competitively bid the Piedmont food 

and beverage service. 

While this service was very popular with the passengers, it was 

also very expensive to operate and maintain. Because we served 

hot meals, the State Health Department ruled it a rolling restaurant. Therefore, we had to comply with all the State regulations. 

Staffing the car with good, reliable employees every day was the 

most challenging aspect of our service. During an average year, 

this service with hot foot cost NCDOT approximately $350,000 

after sales revenues were applied to labor and product maintenance 

costs. This was simply not sustainable. 

With this expense and reduction of travel time, the food service 

on the Piedmont was temporarily modified to include a limited self 

serve menu of complementary coffee, beverages and snacks. 

After much in-house research and surveying of passengers, 

NCDOT decided the most cost effective and efficient food and beverage service for the Piedmont would be self service vending machines. We modified our cafe cars. We had two State-owned full 

size snack machines installed and two beverage machines installed. 

We also installed self service coffee and a bottled water display refrigerator. 

27 

Since transitioning to a vending machine service, significant cost 

savings have been realized. The machines have been shown to be 

very reliable with minimal down time. We converted the cars and 

that cost around $750,000 each. Costs associated with the bottled 

water and coffee are covered by a 50 cent surcharge added to each 

Raleigh to Charlotte corridor ticket. 

Beyond the initial capital costs, NCDOT’s Piedmont snack and 

beverage service is now paying for itself. Based on recent analysis, 

revenue averages about $2,700 per month and supplies and maintenance costs around $2,000 per month. Don’t tell anyone we are 

making money. 

While we made these food services changes, our ridership has 

grown by 279 percent from 2004 to 2013. Since initiating vending 

machine service in 2009, ridership has grown by 248 percent. However, it must be noted that the second daily roundtrip of the Piedmont was added in 2010 and that has driven much of this growth. 

While the Piedmont success story is one with which we are very 

pleased, we currently rely on Amtrak’s food service on the Carolinian which is a much longer route of 704 miles. While we do not 

feel that vending machine service is appropriate for such a long 

route, we do believe there may be opportunities for efficiencies and 

improved service. 

Based on our current agreement with Amtrak, based on the new 

PRIA Section 209 methodology, we estimate that food service losses 

on the Carolinian for fiscal year 2014 are believed to total around 

$500,000. As a State-supported service, we have to pay for that. 

Food service is just one area in which North Carolina has taken 

efforts to improve our service and find more efficient and less costly 

ways to provide passenger amenities. In the coming year, we will 

commission studies to find more efficiencies and enterprising opportunities with our State-supported services. 

We have been a national leader in cost and safety, constructing 

rail improvements and providing passenger service with high customer satisfaction and will continue to develop those services to exceed customer expectations. 

I appreciate the opportunity to provide testimony on these issues. 

The State has innovated and tried to meet the needs of our customers. While we all can learn from these experiences, one size 

does not fit all. 

Thank you. 

[Prepared statement of Mr. Worley follows:] 

28 


Insert offset folio 16 here 86721.016
29 


Insert offset folio 17 here 86721.017

E:5IiI1l0n~ ofPa:Jl C. \\orle~ 

:--":orth Carolina Depm1ment ofTransp,.-mation Rai! Dh·jsion 

befl1re the 

O\ersight and Government Reform Committee 

Subcommittee on GO\'emment Operations 

United States House of Rep resentati yes 

~'ovember 14. ~013 

Chairman Mica. Ranking :'v1emberConnolly. and members of the Subcommittee. I am pleased to have the opportunity today to 

come before you and discuss "'\iorth Carolina's state~supported intercity passenger rait program. our Piedmont and Carolinian 

services and lise of vending machines to provide food service aboard most of our trains. 

My name is Paul \Vorley. and I am Rail Division Director with the :-Jorth Carolina Department of Transportation. Our Departm.ent 

has been has been an active participant in and leaders among the American Association of State Highway and Transportation 

Officials (AASHTO) Standing Committee on Rail Transportation and the States for Passenger Rail Coalition. \Ve have also been an 

engaged participant in the States Working Group on the development of the cost allocation policy and working through the PRIIA 

Section 209 negotiations with Amtrak. 

The North Carolina Department of Transportation Rail Division, or NCDOT, began operation of the Carolinian rail passenger train 

service in May 1990 using Amtrak~owned equipment. This route operates between Charlotte-Greensboro~Raleigh-WashingtonNew York. In May of 1995, the state-supported Raleigh to Charlotte Piedmont service was added. This service was implemented to 

connect the state capital of Raleigh to our state's business center of Charlotte. Amtrak equipment was not available for this service 

so NCDOT procured its own equipment - rehabbing used coaches and locomotives for half the cost of new equipment. 

Both services have enjoyed tremendous growth, with the Piedmont leading the Amtrak system in ridership growth in recent years. 

The Carolinian has grown to the point that capacity constraints are limiting further expansion in the near term. In addition, the 

Piedmont, with its unique state~owned equipment, has consistently been among the best in the country for customer service and 

satisfaction. Over the past ten years, ridership on the Piedmont service has grown from just under 40,000 riders in FFY2003 to over 

170,000 riders in FFY2013. A second daily round trip was added in June of201O. 

Our intercity passenger rail service has evolved as we partnered with the USDOT, North Carolina Railroad Company, Norfolk 

Southern Railway and CSX Transportation to improve safety, strengthen rail infrastructure and reduce travel times. For the first 

seven years of Piedmont service, 1995-2002, NCDOT offered a traditional cafe style food and beverage service. The NCDOTowned cafe car had both ,ounge and booth seating, a self-service cafeteria-style counter line with display refrigeration units 

containing prepackagea foods and beverages, and a fully-equipped galley for hot meal preparation, The car was staffed with one 

full-time employee of a private sector contract food and beverage service provider. NCDOT competitively bid the Piedmont food 

and beverage service over multiple year contracts. The contractor was responsible for provisioning the cafe car, preparing meals and 

providing customer service. NCDOTs private sector train maintenance contractor was responsible for maintaining and cleaning the 

cafe car during layover periods, 

While the original Piedmont food and beverage service was very popular with pa.,.sengers. it was a1so very expensive to operate 

and maintain, Due to the preparation of hot meals - sausage and egg biscuits, grits, barbecue and the like - on board the car, the 

North Carolina Department of Health and Human Services ruled that NCDOT's cafe car was a "rolling restaurant," and tberefure 

had to comply with all state restaurant regUlations and inspections. The restaurant fumigation requirements added costs, mainly by 

increasing the spare railcar ratio, Food onboard a train requires many "touches~" from distributor, inventory, commissary and on-
30 


Insert offset folio 18 here 86721.018

t!"2.in storage, to p:'cparation ani sen ing the customer, .. ; re:;!3urant lequir~s seating and \\ ilh a read) supply of customers, turno\ef. 

The train duty cycle lslo11g and staffing the care car with good reliable employees 7 days a "eek. 365 days a year was the mc~st 

challenging aspect of the service. During an average year. the cate car service with hot food cost \.iCDOT approximately S350.000 

after sales revenues were applied totota! lahor. product and maintenance costs. The Rai! Di\ Ision determined that this annual food 

and beverage seryice loss \vas not sustainable or justifiable for the type of intra-slate passenger seryice pnwided by the Pit!dmont. 

where the lOtal trip time had been reduced by J full hour to three hours. fifteen minutes. 

In part due to the reduction in trip time. and the expense ofotlering hot meal service. food service on the Piedmont was modified 

to include a limited self-service menu of coffee. complimentar:' beverages and snacks. Complimentary items V,lere offered until we 

could reevaluate our service. retool our equipment and change our offerings. 

At the same time. :\"CDOT was also reevaluating its checked baggage service, which required the lease of Amtrak-owned baggage 

cars. That full-length baggage car was underutilized due to the short Piedmont trip lengths. In addition to the baggage car lease 

payments. "KeDOT had to pay for the ongoing maintenance of the car. Thus the cost-benefit ratio for Piedmont baggage service was 

poor, much like the food and beverage service prior to 2003. 

After much in~house research and surveying of passengers, NCDOT decided the most cost effective and efficient food and beverage 

service for the Piedmont would be self-service vending machines. The Rail Division decided to combine all "non~revenue" 

functions in one railcar. thus eliminating the need for and expense of separate food service and baggage cars. NCDOT's cafe cars 

were withdrawn from service one by one for modification. The galley, cafeteria counter and display refrigeration and freezers were 

removed from the cars. In their place, a 28.foot-long baggage section with five bicycle racks was constructed. A 20-foot-Iong portion 

ofthe lounge area was converted to the vending machine area. On one side of the vending area, t\.\'o state-owned fun size snack 

machines and two full size beverage machines were installed. On this side there is also a counter that includes recycling for bottles. 

printed materials and cans. 1be vending machines are fuBy bolted and attached to the passenger cars so that they may withstand 

tipping in service or in the event of a derailment at 8 G's oftearout force. On the opposite side of the aisle, a stainless steel counter 

with a sma11 sink, self-service coffee dispensing machine and a bottled water display refrigerator were installed. The vending 

machine area was made wheelchair accessible. r\\o'O wheelchair locations with folding tables were installed in the 10unge area. 

I will now quickly go through some slides so you can better visualize the changes in our equipment. 

Since transitioning to vending machine service, significant cost savings have been realized. The machines have proven very reliable 

with minimal downtime, Contract vending machine repair technicians are available on short notice at both ends ofthe Raleigh 

to Charlotte rail corridor, Because each NCDOT baggage/lounge car carries two snack machines and two beverage machines, 

redundancy assures product availability should one machine be temporarily out ofscrvice or out of a particular variety of product. 

The conversion oftbe NCDOT cafe cars to combination baggage/lounge cars cost NCDOT approximately $750,000 each. The 

average cost of a vending machine is $3,500. During a typical month their sales exceed the cost of goods sold. Costs associated with 

bottled water and self-service coffee are covered by a 50¢ surcharge added to each Raleigh to Charlotte corridor ticket. To maintain 

uniform pricing between the Piedmont and Carolinian, the surcharge was also added to each Carolinian fare (for the Raleigh to 

Charlotte c-orridor only). Exclusive of the initial capital costs for converting the NCDOT railcars to vending machine service, 

NeDOTs Piedmont snack and beverage service is now paying for itself Because meals are no longer prepared on the railcar, State 

Health Department inspections and maintenance requirements, and their associated costs, have ended. Products in the vending 

machines are purchased at local warehouse dubs and stocked by our maintenance contractor. Vending machine products that are 

near expiration are donated to a non-profit Food Bank. 
31 


Insert offset folio 19 here 86721.019

cost for supplies. maintenance and depredation totals about $2.000 per month. While \\e made these food service changes. our 

ridership bas groV,;l by '279~ () (from FFY1004 to FFY201:;). Since initiating vending machine sen ice in FF'y'2009. rid.ership has 

grovHl by 248°'0. However. it must he noted that t;le second daily round trip of Piedmont service was added in FFY2010 _. and thaI. 

as opposed to food ser\ ice offerings. has driven much ofthis growth. Given the relatively short trips times. ' .. e do not believe that 

the vending-style food offerings have negatively impacted our service. and we do pride ourselves in having a good cup of cot Tee 

that is made by the cup to minimize waste. I will add! 

While the Piedmol1l's success story is one that we are very pleased \vith. we currently rely on Amtrak"s food service on the 

Carolinian. which is a much longer route that operates through to the ~ortheast Corridor. \\'hite ·we do not feel that vending 

machine service is appropriate for such a long route (704 miles) with average trip lengths of over 300miles. we do believe there may 

be opportunities for efficiencies and improved service and products. We look forward to working ill collaboration with Amtrak to 

increase revenue and find efficiencies while improving service. For example, there is not an incentive for food service attendants to 

increase sales. Also. the food service car is closed for part of each trip so that employees can inventory stock during a shift change. 

Amtrak has indicated that point of sale systems are on the \vay and will prevent this practice, but to date, it continues. These arejust 

a few of the areas we would like to look into. Also, many products often sell out and there are limited to no measures to restock. 

To look into matters such as these, accurate food service revenue and cost data must be provided. Currentiy, only summary level 

estimates are made available by Amtrak. Amtrak has indicated that it cannot provide actual sales information and product cost 

data for the Carolinian route. However, based on our current agreement with Amtrak, that is based on the new PRIIA Section 209 

methodology. we estimate that food service losses on the Carolinian for FFY2014 are believed to total approximately $500K. 

Unfortunately, the limited data we are provided by Amtrak and the processes in obtaining it does not allow us to maintain a real~ 

time cost analysis of the riders and fares so that we get a good account of who has paid for the coffee and water surcharge on the 

Piedmont. Getting such data. much of which Amtrak designates as proprietary. is always complex and is governed by proprietary 

provisions that are detailed in our new Section 209 operating contract. IfNCDOT had more current or real time access to this 

data through the Amtrak E-ticketing system while providing Amtrak the ability to protect their franchise. we could better analyze 

costs, expenses, revenues, and ridership between city pairs, thus providing an improved service that is partly paid for through the 

public sector. This would also allow us to better collaborate with Amtrak on providing the North Carolina services. While the 

exact amount of surcharge revenue is not known due to these data limitations, we have calculated the surcharge based on historical 

passenger infonnation. Based on this calculation. we believe surcharge revenue for the Piedmont service, which is used to pay for 

water and coffee service, totaled approximately $78K in FFY2012. or about $6.500 per month - far in excess ofthe average monthly 

cost of approximately $2.4K. 

Vending is just one area in which North Carolina has taken steps to improve our service and find more efficient and less costly ways 

to provide passenger amenities. We noted the savings in capital costs by procuring and restoring used equipment to today's safety 

and travel standards. In addition, we provide amenities such as AC power at all seats, 4G Wi-Fi coming early 2014, and volunteer 

train hosts that assist riders with information in order to provide the best customer service experience possible, Also, our Piedmont 

equipment has been maintained by private contractors, who are provided benefits comparable to state employees including health 

insurance, at our Raleigh maintenance facility owned by NCDOT since 1995. We are very pleased with the quality of maintenance 

performed on our fleet and the flexibility to accommodate daily and special operations. 

In the coming year, we will commission studies to find more efficiencies and enterprising opportunities with our NCDOT passenger 

services, including but not limited to food offerings, reservation services,joint marketing opportunities and brokered purchase 

ofliability coverage, which continues to be a major expense for NCDOT - but is one area that Amtrak can cover without such a 

significant expense to states. 
32 


Insert offset folio 20 here 86721.020

:-.;CDOT has led the na:ion in ci\)ssing sutety. constructil:g rail imprO\eillcHtS - no\\ c\'~:1 with k)cJ.l tradititmai higlJ\\3)- contractors 

\\lorking on main line railroad prc:iects. and provjding passenger service \vith high customer sarist:1C":-ioll. Against this backdrop of 

innmating. karning and making rational adjustment::.. -:\CDOT continues to develop sen ices that exceed customer expectations. 

All this being said. we kno\\ that there is still much to do. As Congress prepares to reauthorize PRIIA. I hope you will look at 

\vays to provide extra flexibility to the states- the ones no\,\- pa} iog for the ailocated cost ofseryices as per Section 209 - and 

not ovenvhelm us with processes that keep data from public view. labor costs high and without flexibility. and amenities without 

competition and innovation. A 21st-century high-performing railroad service must be allowed to take advantage of competitive 

contracts in both cost and service delivered. This will al10\\' states to improve the services. generate additional revenues. and close 

the financial gap bet\veen the farc box and service provided by the state. 

Mr. Chairman. I appreciate the opportunity to provide testimony on these issues. States have innovated in food and other services to 

meet the needs of our customers. \Vhile we can all Jearn from these experiences, one size does not fit all. and a solution that works 

well in one state may not work in another part of the country. As Congress considers reauthorizing PRIIA, I ask that you grant 

more authority - and perhaps even incentives to states and Amtrak - to develop creative and cost-effective solutions. I ask for the 

continued support of the Subcommittee as we pursue our work~ and I again offer our assistance as the body considers important 

isstles that impact our ability to deliver a cost-effective and efficient rail passenger program. Thank you. 

For more information on NCDOT passenger service initiatives, visit our web site at 

http://\V"\vw.ncbytrain.org 

or contact: 

Paul C. Worley, CPM 

Rail Division Director 

NC Department of Transportation Rail Division 

1553MSC 

Raleigh, NC 27699-1553 

Phone: (919) 707-4714 

pworley@ncdot.gov 
33 


Insert offset folio 21 here 86721.021
34 

Mr. MICA. Very accurate, right down to the second. Thank you. 

We will hear now from Mr. Dwayne Bateman. He is Vice General 

Chairman of Unite-HERE Local 43. Welcome and you are recognized. 

STATEMENT OF DWAYNE BATEMAN 

Mr. BATEMAN. Thank you, sir. 

Chairman Mica, Ranking Member Connolly and members of the 

committee, thank you for the opportunity to come today and speak 

on behalf of Amtrak’s food and beverage service workers. 

My name is Dwayne Bateman. I am a lead service attendant currently working in Amtrak’s Northeast corridor between Washington and New York City. I am also Vice General Chairman for 

Unite-HERE Local 43 which represents many onboard service 

workers. I have been in on-board service for over 35 years working 

virtually every position associated with this service and on numerous trains. 

When you work on-board Amtrak trains, you have to be trained 

and able to respond to every type of emergency. You cannot call 

911 on a train traveling across the Mojave Desert or the Great 

Plains. If someone has a heart attack, we have to save their life. 

If there is a derailment, we have to evacuate the train. If there is 

a terrorist onboard, it is our job to take action. We are trained and 

ready to respond. 

Another fact concerning working on Amtrak trains. It is extremely grueling. Say someone is working the California Zephyr between Chicago and northern California, which is a six day 

roundtrip assignment where they work 84 hours practically on 

their feet the entire time. The shortest workday lasts 10 hours and 

there are three days where they work 17 hours or more per day. 

Anyone who works for on-board service knows what back breaking 

labor feels like. 

No one is more acutely aware of the pressures facing Amtrak 

than the service workers who devote themselves to caring for our 

passengers. Now the Inspector General says we earn too much. To 

justify this, his report made comparisons to the Downeaster which 

only lasts eight hours roundtrip and does not profit from its food 

service. He also compared us to tourist trains that do not operate 

overnight or have sleeping berths. 

None of the aforementioned service workers are subject to the arduous conditions or required to meet the stringent emergency and 

safety training standards of Amtrak employees. Let us be frank. 

Low wage food and beverage jobs are completely incompatible with 

transportation security and good customer service. 

Rather than playing politics or making uninformed comparisons, 

let us be reasonable. If you want to look at the cost of similar types 

of work, do not look at commuter service or tourist railroads. Look 

at aviation instead. 

After five years of service, an Amtrak food and beverage worker 

earns between $24.50 and $28.62 per hour. This is very similar to 

flight attendants on American, Continental, Delta, Spirit, United 

and US Airways. Not only do airlines pay the same rates as Amtrak, they also recognize the value in food service. Despite the 

much publicized decade of cost cutting on airplanes, Amtrak’s per 

35 

passenger food service costs may actually be lower than U.S. airlines. 

Premium fare passengers expect Amtrak, like other transport operators, to provide food and beverage service as an amenity included in the price of their ticket. While the past decade has seen 

commercial airlines take extreme measures to cut meal service to 

their coach passengers, they have committed to recognize that culinary amenities are essential to maintaining competitiveness in the 

premium market. 

Some have proposed that the best solution to the ageless riddle 

of how do you profit from passenger rail or more specifically, Amtrak’s passenger rail food service is outsourcing our work and providing corporate subsidies to those same contractors with no promise of well qualified personnel, a living wage or benefits. 

Simply put, it is not fair to Amtrak’s onboard service workers or 

passengers who pay for, expect and deserve safe and reliable service. 

When I joined Amtrak, I had no expectation that this job would 

make me a rich man but it is honest and respectable work with 

long hours. We earn a fair wage, we get rail retirement pension 

which is funded solely by contributions from railroads and their 

employees. It has allowed me to provide for my family, help send 

my two girls to college and live a middle class life. 

I have invested over three decades in this career. I have worked 

hard, earned a decent living and expect to retire with dignity. I 

urge you, before eliminating good American jobs, consider that all 

could be adversely affected or devastated. 

Thank you very much for your time. 

[Prepared statement of Mr. Bateman follows:] 

36 


Insert offset folio 22 here 86721.022

Testimony of 

Dwayne Bateman 

Amtrak Food and Beycrage Worker 

Before 

Committee on Oversight and Government Reform 

Snbcommittee on Government Operations 

"Reviewing Altematives to Amtrak's AI/llual Losses ill Food alld Bel'erage Services" 

November 14, 2013 

Chairman Mica, Ranking Member Connelly and members of the committee, I thank you and 

welcome this opportunity to participate in this bearing on Amtrak food and beverage service. 

My name is Dwayne Bateman and I am a Lead Service Attendant currently working on Amtrak's 

Northeast Corridor route between Wasbington, D.C. and New York City. I am also Vice 

General Chairman for Unite-HERE Local 43, one oftbe three unions that represents Amtrak's 

on-board service workers. I have been an on-board food and beverage worker for over 36 years, 

working in virtually every position associated with this service including Train Attendant, 

Service Attendant, Food Specialist, and Lead Service Attendant. During my career I have 

worked on several Amtrak routes including the Capitol Limited and the Cardinal between 

Washington, D.C. and Chicago; the Crescent between Washington, D.C. and New Orleans; the 

Montrealer between Washington, D.C. and Montreal, Quebec; and the Northeast Corridor. 

Having worked as an on-board employee for all of these years, I am in a position to shed light on 

Amtrak's food and beverage services from a worker'S vantage point. To begin, I need to point 

out that comparing Amtrak food and beverage services to a fast food restaurant, such as 

McDonaJds, completely ignores the requirements and responsibilities of on-board service 

workers. The comparison reveals a lack of understanding concerning the job functions and 

Amtrak's strict safety standards. I hope this hearing will not continue to rely on these types of 

faulty comparisons. 

Amtrak On-board Service Worker Job Functions 

The job duties are unique, demanding, and require training to perform mUltiple functions, as I 

described in detail in my written testimony for an August 2, 2012, House Transportation and 

Infrastructure Committee hearing. 

Safety and Security Functions 

On-board Amtrak service workers are responsible for the safety of the riding public. They are 

required to take several training modules that prepare them to respond to a wide range of 

potential events that may occur on a train, from a derailment, to a medical emergency, to a 

security breach. Given the railroad environment, emergencies can occur in remote locations that 

are difficult fur emergency responders to access. Fire and rescue personnel cannot always arrive 

on the scene immediately. This means on-board workers are the first responders in the event of 

an emergency. Employees are trained in emergency evacuation procedures and in fire 

suppression. They get Red Cross first aid training, special training to assist passengers with 

disabilities, and they are trained to handle bomb threats and suspect packages. (Appendix 1 

provides a brief summary of safety and security training on-board workers receive.) 

I 
37 


Insert offset folio 23 here 86721.023

Job Functions 

On-board workers perform their food and beverage functions aboard a moving train. This is a 

unique environment. In addition to the safety, security and food and beverage functions, onboard service workers have to be intimately familiar with the design, layout, and safety features 

in every type of car in the train. [n an emergency, they have to open and lower traps, make trainto-train passenger transfers, and direct emergency evacuation. 

Work responsibilities include on-board accounting procedures, announcements, signage, service 

recovery procedures, baggage handling, customer service, and unifonn requirements. All of this 

work is governed by extensive policies, procedures and standards, as illustrated in the Service 

Standards Manual Table ofConlents. (Please refer to Appendix 4.) 

They must comply with extensive policies, procedures, and instmctions that govern the delivery 

of food and customer services, many of which require specialized training to perfonn. They 

comply with U.S. FDA regulations governing Amtrak food service. 

A single shift on the Northeast Corridor usually lasts 12 to IS hours. On long distance trains, the 

job functions and environment are even more demanding. During three- to six-day trips, onboard workers generally work 16 hours each day. If a trip lasts one week or more, on-board 

workers may work as many as 46 hours in a 6S-hour window. (In appendix 2, tables 1-3 provide 

a snapshot of a Lead Service Attendant's workday on the Northeast Corridor. Appendix 3 offers 

information on a Lead Service Attendant's schedule aboard a long distance train.) 

Unlike many workers, on-board employees do not make overtime pay after working eight hours 

in a day or even 40 hours in a week. It is common for on-board attendants to work 17- or IShour days with a minimal crew. But overtime pay kicks in only after they have worked 185 

hours in a month. In negotiations, the Service Workers Council has asked Amtrak for overtime 

pay after 16 hours of work in a day, and Amtrak has said that it could not afford it. 

These employees not only work away from their homes, but their schedules are erratic. Up to 20 

percent of these employees do not have established rest days and they are subject to call for 

assignment at any time day or night. 

In addition, their hourly rates of pay are designed to cover the many hours for which they receive 

no compensation whatsoever. A look at schedules for service attendants, as an example, shows 

that on the Capitol Limited and the Cardinal they are only paid 29 hours 15 minutes per trip, but 

they are required to spend an additional 21 hours 40 minutes of unpaid time on the trains or at 

away-from-home tenninals-that is, 42 percent of the employee's time is unpaid. On other 

trains, the percentage of unpaid time is similar. 

In negotiations, Amtrak management has preferred to grant incremental wage increases rather 

than to agree to work rule changes such as overtime pay after 16 hours of work, or payment for 

more of the time on the job that is currently unpaid. For anyone familiar with these matters to 

now tell us that those pay rates are excessive is to stand that bargaining history on its head. 

In recent years, some refonners have proposed the privatization of food and beverage services. 

A provision in H.R. 7 would have provided corporate welfare to private contractors while 

eliminating decent middle class Amtrak jobs like mine. Those sorts of proposals are simply not 

credible and they do not offer a positive contribution to any effort to improve Amtrak services. 

2 
38 


Insert offset folio 24 here 86721.024

The effort by some members of Congress to justif~> contracting out food and beverage service on 

Amtrak ignores these unique working conditions and its traincd and specialized on-board 

workforce. It also ignores the failed attempts to contract out this sClyice in the past. 

Amtrak has explored contracting out this service, And some union members have lost their jobs 

as a result. All of its efforts have either failed to get off the ground or did not generate profits. 

Amtrak has attempted to contract out the use of food carts on the trains and experimented with 

installing vending machines. It privatized the commissaries, but profits never poured in, When 

the states of Maine and North Carolina hired vendors to operate cafe cars on short routes, they 

were forced to provide subsidies to the private companies even though they hired workers at 

significantly lower rates of pay. Despite proponents' promises, contracting out does not offer 

any easy answers. 

Amtrak Inspector General Report 

Last month, the Amtrak Inspector General released a report on the food and beverage service. 

The study has some serious flaws. In contrasting our work to on-board services at Alaska 

Railroad, Rocky Mountaineer, and the Downeaster, the Inspector General made ill-informed and 

misleading comparisons. None of the services the Inspector General compared to Amtrak's food 

and beverage service even begin to mirror Amtrak's operations and services. 

The Rocky Mountaineer offers scenic railroad service that is marketed to tourists. The schedules 

are seasonal in nature and get curtailed during the winter months. It does not offer sleeper berths 

and passengers are apparently expected to sleep in hotels during trips that last more than a single 

day. Additionally, because the Rocky Mountaineer runs almost exclusively in Canada it operates 

under a completely different set of legal requirements. Health care costs for employers are 

dramatically different because of Canada's nationalized system of health care. The pension 

systems are also different. In the United States, the Railroad Retirement system is privately 

funded by contributions from employers and employees. Additionally, members of Congress 

should think twice before embracing the Canadian rail safety regime, which allowed one-person 

crews and contributed to the tragic accident at Lac-Megantic, Quebec in which dozens of 

innocent people were killed by an unattended 74-car runaway train. 

Like the Rocky Mountaineer, the Alaska Railroad limits its service during the winter months. 

Additionally because it does not operate interstate service, the railroad is subject to a different set 

of transportation, safety, and labor laws. Rail labor supports the Alaska Railroad and its hard 

working employees, but it does not provide the extensive intercity passenger rail services that 

'make up the national network operated by Amtrak. 

The Inspector General also used the Downeaster as a basis of comparison. The Downeaster is a 

state supported Amtrak route between Boston and Brunswick, Maine. The service is 

significantly different from most Amtrak routes. The trips are relatively brief, with a one-way 

trip lasting less than three-and-one-half hours. The Downeaster's fuod and beverage service was 

examined in some detail in a 2012 Transportation and Infrastructure Committee hearing, which 

revealed that even the Downeaster cannot make a profit on its cafe. According to Patricia Quinn, 

the Executive Director of The Northern New England Passenger Rail Authority, which operates 

the Downeaster, "The Downeaster achieves the cost and recovery rate of75 percent in our fiscal 

year, which runs from July through June. In our fiscal year 2012, OUf total cafe sales were about 

$575,000. Cafe expenses were about $770,000, which is a net loss of$195,000." 

3 
39 


Insert offset folio 25 here 86721.025

Downeaster cafe employees do not meet the same \\"age or safety standards as those on other 

Amtrak routes. During the hearing, Rep. Nick Rahall's (D-WV) questions to Ms. Patricia Quinn 

revealed that workers on the Dowoeaster meet much different safety, training, and work duty 

criteria. 

Mr. RAHALL What are your food and beverage workers paid? And what kind of 

benefits do they receive, what sort of training do they receive? And do they receive 

background checks? 

1\1s. QUINN. Our food and beverage workers have different job descriptions and duties 

than the Amtrak LSAs do. They generally are food service workers, and their role and 

responsibility is to get on the train and manage the cafe. The conductor stays as the 

person who is in charge of the train. They go through a regular employment review, not 

necessarily a background check. 

Mr. RAHALL. Training? 

Ms. QUINN. And training is in food service and the operation of the cafe, but not in the 

operation of the train. So it is not as extensive as what the Amtrak LSAs receive. 

Additionally, in responding to Rep. Corrine Brown's (D-FL) questions, Ms. Quinn said, "You 

know, our operation is pretty barebones. There are about 15 or 18 employees, food service 

cmployees." 

Rather than offering faulty comparisons between Amtrak and the three rail services outlined 

above, the Inspector General should have looked at other national railroads or the aviation sector. 

Flight attendants on U.S. airlines provide food and beverage service every day. But they are also 

subject to a strong set of safety standards mandated by the federal government. And, like 

Amtrak workers, many flight attendants earn middle class salaries. 

Without factoring in revenue, the total cost of Amtrak's food service has averaged $6.95 per 

passenger since 2008. lOver the same period, American, DeltalNorthwest, and 

Continental/United spent an average of $5.33-$6.46 per passenger on food service supplies 

alone, prior to the labor costs of service, which represented over 50 percent of the Amtrak total. 

Premium fare passengers expect Amtrak, like any other transport operator, to provide food and 

beverage service as an amenity included in the price of their tickets. While the past decade has 

seen commercial airlines take extreme measures to cut meal service to their coach passengers, 

they have continued to recognize that culinary amenities are essential to maintaining 

competitiveness in the premium market. 

In addition, unlike most commercial airlines, Amtrak has established and maintains a substantial, 

functioning retail business in on-board food and beverage sales. Based on the proportion of 

Amtrak's food and beverage revenue that came from cash sales in 2005, sales have likely 

averaged well over $2.00 per passenger in recent years.2 By comparison, industry reporting 

suggests average food and beverage sales for commercial airlines were less than $1.00 per 

passenger in 2009. In filet, at a 2010 airline industry conference, one consultant used Amtrak's 

I 2011 cansla'" dollars 

l 201/ constant dollars. Assumes 50-60% of lotolfood and beverage revenues are generated through cash sales. (See 2006 

National Roll Passenger Association Economic While Paper 

hUp:llwll'W.narprail.org/cms/images/upioadsiwhilepaper Jood_06.pdj) 

4 
40 


Insert offset folio 26 here 86721.026

in-scm sales program as a model of service and salesmanship for airlines struggling to establish 

on-board retail operations, describing the Amtrak program as "perfecting an on-board at-seat 

sales tradition:,3 

The unions representing on-board food and service workers are continually working with Amtrak 

to uphold the highest levels of safety, improve the customer experience, and increase the cost 

recovery, However, ill informed comparisons from the Inspector General contribute absolutely 

nothing to this effort. 

Conclusion 

I have spent my life working for Amtrak with a promise of earning a fair wage and getting a 

decent Railroad Retirement pension, which is funded solely by contributions from railroads and 

their employees. When I joined Amtrak, I had no expectation this job would make me a rich 

man. But it is honest and respectable work with long hours. It allowed me to provide for my 

family, help send my two girls to college, and live a middle class life. I have invested over three 

decades into this career. I work hard, earn a decent living and I expect to retire with dignity. I 

urge you to consider this before eliminating these good American jobs. 

Again, I thank you for the opportunity to testify before this committee. 

3 Ideaworks, Inc., "Airline biformation Mega Event 2010" 
41 


Insert offset folio 27 here 86721.027

APPENDIX 1 - SUMMARY OF ON-BOARD WORKER TRAINING REQUIREMENTS 

(DOES KOT ll'iCLt:DE ALL REQUIRED TRA.l."iIKG) 

Emergency Preparedness Training: We receive training to be prepared to 

respond to any emergency situation, such as a derailment, service interruption or 

fire. Weare also required to have emergency preparedness training to respond to 

injuries and illnesses, which includes emergency care that covers CPR and the use 

of automatic defibrillators. This training is required every two years and we are 

not permitted to work if our training is not current. 

First Aid Training: We receive training to be prepared to respond to an on-board 

injury or illness of a passenger or co-worker and are governed by first aid 

procedures. 

On-Board Passenger Safety Training: We receive training to be prepared to 

assist passengers with on-board safety while on the train. We assist passengers 

with basic but important requirements while on board, such as wearing shoes at all 

times, not standing in vestibules, no running, using seatbacks and luggage racks for 

stability, and safe boarding and exit. 

Training to Assist Passengers with Disabilities: We receive training to assist 

passengers with disabilities, both non-wheelchair and wheel-chair assistance, and 

service animals. 

Emergency Evacuation Training: We receive training to evacuate passengers 

from trains in the event of an emergency, to use emergency on -board equipment 

and to respond to particular types of accidents, such as train emergencies in 

tunnels. 

Training on Responding Bomb ThreatslUnattended Items: We receive training 

to be prepared to respond in the event of a bomb threat or other terrorist activity, 

and training to be vigilant for unattended items and how to respond. 

Training on FDA Rules and Inspections: We receive training on FDA rules and 

inspections. We are governed by policies and procedures for the safe handling of 

food, the inspection and monitoring of food service equipment, including 

refrigerators and freezers, and safe procedures for supplying coaches with water 

and refilling storage tanks. 
42 


Insert offset folio 28 here 86721.028

APPENDIX 2 - ON-BOARD WORKER JOB FUNCTIONS 

LSA-Cafe WorkDav on Northeast Corridor Pre-Dc arture Work Table 1 

5:15AM Report For Work (Washington to Boston Trip) 

* Sign in and receive safety briefing. uniform inspection IVith possible bank and tool check 

* Confer with supervisor regarding unusual OCCUITences~ conditions or schedule changes 

* Check bulletin board for recent operation or service memos 

* Re,iew manifest to identify business class customers, or if there are groups. special requests 

* Inventory stock, report shortages, and submit backorders to vendor 

* Check stock to make sure it is usable, in-date 

* Complete paperwork 

* Properly store stock 

* Inspect equipment and report any defects to mecbanical department 

* Check HV AC, water, doors, lighting, seating, contact surfaces. etc. 

• Check food service equipment and temperatures of remgerators and freezers 

• Verify cash register or POS is installed and functioning properly 

* Set up credit card machine 

• Inspect interior of cafe car for cleanliness and defects 

• Inspect bathroom for cleanliness/properly stocked 

• Check wall menus 

• Check to confirm that the required forms, tools and supplies are on board 

* Set-up service display on the counter 

• Set-up bar-back display 

• Prepare support materials 

• Fill condiment trays 

• Make coffee 

• Greet and assist passengers 

LS.\-Cafe "ork Da~ on l'iorthcast Corridor I<.n-Routc \\ ork I ahle 2 

7:00 AM Depart on Train No. 2154 - Destioation Boston 

* Maintain a professional demeanor and appearance 

* Provide high level customer service 

* Make required service announcements 

* Greet and assist passengers 

• Provide customer information 

* Prepare and serve food and beverages 

* Maintain and control inventory 

• Secure company funds 

* Monitor refiigeration 

* Monitor restrooms, clean, re-stock when necessary 

• Monitor, clean tables and seats when necessary 

• Contiouous observance for unusual, suspicious passenger activity 

• Continuous monitoring for unattended luggage 

• Continuous monitoring of luggage racks to ensure luggage properly secured 

• Continuous monitoring of walkways to ensure no obstructions 

• Continuous monitoring of trash receptacles and replacement when necessary 

LS \-Catc nOl'k f)ll~ 011 l'iOr1hcllSt Corridor l<:nd of] lip "01'1. I able 3 

11:30 PM Arrive on Train No. 2173 - Washington 

• Inventory supplies and separate condemnation 

* Close out cash register 

• Close out credit card machine 

* Complete inventory and sales report fonn (Transfer Out Form) 

• Reconcile Transfer Out Form and cash register report 

• Note defects on the mechanical report 

• Clean work areas 
43 


Insert offset folio 29 here 86721.029

APPENDIX 3 - ON-BOARD WORKER JOB FUNCTIONS I LONG DISTANCE 

LSA-Cafe Tri on California Ze hvr Pre Tri Work Train No.5 

DAY 1 

11:00 AM Report For Work (Chicago to California) 

* Sign in and receive safety briefing. unifonn inspection with possible bank and tool check 

* Confer with supernsor regarding unusual occurrences, conditions or schedule changes 

* Check bulletin board for recent operation or service memos 

* Review manifest 

* Inventory stock, report shortages, and submit back orders to vendor 

• Check stock to make sure it is usable and in-date 

* Complete paperwork 

* Properly store stock 

* Inspect equipment and report any defects to mechanical department 

* Check HVAC, water, doors, lighting, seating, contact surfaces, etc. 

• Check food sernce equipment and temperatures of refrigerators and freezers 

• VerilY cash register or POS is installed and functioning properly 

* Set up credit card machine 

• Inspect interior of cafe car for cleanliness and defects. 

* Inspect bathroom for cleanliness/properly stocked 

* Check wall menus 

• Check to confinn that the required Forms, tools and supplies are on-board 

* Set-up sernce display on the counter 

• Set-up bar-back display 

* Prepare support materials 

• Fill condiment trays 

* Make coffee 

"" Trip Continuation (Day 1) 

I.S \-Cafe [Ii on California Ze hu En-Route \\ork rrain :\0. S 

DAYl 

2:00 PM Depart on Train No.5 

(On Duty from 11:00 AM - 11:00 PM) 

* Maintain a professional demeanor and appearance 

• Provide high level customer sernce 

* Make required service announcements 

* Greet and assist passengers 

* Provide customer information 

• Prepare and serve food and beverages 

* Maintain and control inventory 

• Secure company funds 

• Monitor refrigeration 

• Monitor restrooms, clean, re-stock when necessary 

* Monitor, clean tables and seats when necessary 

12 Hours on Duty I 6.S Hours Rest on Train 

• Continuous observance for unusual, suspicious passenger activity 

• Continuous monitoring for unattended luggage 

* Continuous monltoring ofluggage racks to ensure luggage properly secured 

• Continuous monitoring of walkways to ensure no obstroctions 

* Continuous monitoring of trash receptacles and replacement when necessary 

NOTE 

Job Functions Applicable to All On-Duty Sbifts During Trip 
44 


Insert offset folio 30 here 86721.030

Appendix 3 - Page 2 

.... Trip Continuation (Day 2) 

LSA-Cafe Trip on California Zephyr En-Route Work Train No.5 

DAY 2 

Shift Starts at 5:30 AM 

(On Duty from 5:30 AM - 11 :00 PM) 17.5 Hours on Dnty 17 Hours Rest on Train 

NOTE 

En-route Job functions Continue 

.... Trip Continuation (Day 3) 

LSA-Cafe 1 rip on California Ze h) r En-Route" ork rrain No.5 

DAY 3 

Shift Starts at 6:00 AM 

(Ou Duty from 6:00 AM - 5:00 PM) 11 Hours on Duty 113 Hours Rest in Hotel 

Scheduled Arrival at Destination (Emeryville, CA) 

NOTE 

En-route Job functions Continue 

LSA-Cafe 1 rip on California Zcph~ r Post I rip \\ ork 

4:10PM Arrive on Train No.5 - Emeryville, CA 

• inventory supplies and separate condemnation 

• Close out cash register 

• Close out credit card machine 

• Complete inventory and sales report fonn (Transfer Out Form) 

• Reconcile Transfer Out Form and cash register report 

• Note defects on the mechanical report 

• Clean work areas 

Off Duty 5:00 PM 

.... Trip Continuation (Day 4) 

LS,\-Cafc I rip on California Zcph~ r Return I rip to Chicago I rain '\'0. 6 

DAY 4 

6:00AM Report For Duty (California to Chicago) 

9:10 AM Depart on Train No.6 

(On Duty from 6:00 AM -11:00 PM) 17 Hours on Dnty 17 Hours Rest on Train 

NOTE 

Same Pre-Trip Job Function. as Train 5 - Chicago to California 
45 


Insert offset folio 31 here 86721.031

Appendix 3 - Page 3 

+ Trip Continuation (Day 5) 

LSA-Cafl' Trip on California Ze hyr Return Tri to Chicago 1 min No.6 

DAY 5 

Shift Starts at 6:00 AM 

(On Duty from 6:00 AM-11:00 PM) 17 Hours on Duty I 7 Hours Rest on Train 

NOTE 

Same Pre-Trip Job Functions as Train 5 - Chicago to California 

+ Trip Continuation (Day 6) 

LSA-Cafe Trip on California Ze h~r Enroutc Work frain No.6 

DAY 6 

Shift Starts at 6:00 AM 

(On Duty from 6:00 AM - 4:00 PM) 10 Hours on Duty 

Scheduled Arrival at Destination (Emeryville, CAl 

NOTE 

Enroute Job functions Continue 

LSA-Cafe Tri on California Zc )h~ r Post r rip "ork 

2:5.0 PM Arrive on Train No.6 - Chicago, IT, 

NOTE 

Same Post trip Work as Train 5 -Chicago to California 

Off Duty 4:00PM 

Dail) Summary-California Zeph)I· Trains 5/6 

DAY TIME ON TIME OFF COMPENSATED TIME UNPAID AFH REST 

1 11:00 AM 11:00 PM 12 HOURS 6.5 HOURS 

2 5:30AM 11:00 PM 17.5 HOURS 7 HOURS 

3 6:00AM 5:00PM 11 HOURS 13 HOURS 

4 6:00AM 11:00 PM 17 HOURS 7 HOURS 

5 6:00AM 11:00 PM 17 HOURS 7 HOURS 

6 6:00AM 4:00PM 10 HOURS N/A 

COMPENSATED NON-COMPENSATED 

TOTAL HOURS 84 HOURS 40.4 
46 


Insert offset folio 32 here 86721.032

Appendix 3 - Page 4 

TRIP SUMMARY FOR CALIFORNIA ZEPHYR - TRAINS 5 & 6 

Total Days Away from Home (AFH): 

Total Trip Hours: 

Total Compensated Hours 

Total Uncompensated Hours 

Percentage of Trip (Away from Home & Non-Compensated) 

OTHER FACTORS: 

• Hours may be extended due to delays 

• 4 out of the 5 nights, the rest period is short, and on-hoard a train 

• Workers get only one extended rest period (Day 3) in a hotel 

6 Days 

124.5 

84 

40.5 

32.5% 
47 


Insert offset folio 33 here 86721.033

APPENDIX 4 - A_M:TRAK SERVICE STANDARDS M~"'UAL - TABLE OF CONTENTS 

Definitions & Abbreviations 

CI Safety & Security 

Section 1: Safety 

Section 2: 

Section 3: 

Passenger Train Emergency Preparedness 

Terrorist Activity 

C2 

C3 

C4 

C5 

C6 

C7 

C8 

Injury, Illness and Reporting 

FDA Rules & Inspections 

Baggage Handling 

Uniform & Grooming 

Crew Functions & Responsibilities 

Policies & Procedures 

Accounting 

Section 2: On-Board Service Accounting Procedures 

C9 Service Recovery 

C-IO On-Board Announcements and Signage 

C-ll Assisting Passengers with Disabilities 

C-12 Equipment 

C-13 Phone Numbers 

C-14 Assisting Passengers with Disabilities 

AMTRAK Ol\-BOARD FOOD and BEVERAGE II ORKERS 

TRAINING 

Extensive Safety & Security Training 

• Emergency Preparedoess Training 

• First Aid Training 

• On-Board Passenger Safety Training 

• Training to assist Passengers with Disabilities 

• Training on Responding to Bomb ThreatsUnattended Items 

• Training on FDA RuJes & Inspections 

• Employee Security Awareness Training 

• Block Training-Safety, Security & Customer 

Service Training 

DUTIES 

W'ule Range of Responsibilities 

• Providing Food & Beverages - including preparing meals, 

cooking and selling 

• On-Board Accounting Procedures 

• Announcements and Signage 

• Service Recovery Procedures 

• Baggage Handling 

• Extensive Pre-Departure, En-route and End-of-Trip 

Responsibilities 

• Tend to any medical or safety emergency, service 

disruptions or train failures 

• Shifts from 12-18 hours, and on Long-Distance trains 

trips that encompass as much as a week away from home 
48 

Mr. MICA. Thank you for your testimony and I thank each of the 

witnesses. 

Let me yield the first five minutes or whatever time he may consume for an opening statement before we get to questions, the 

Ranking Member, Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

I apologize for being late this morning. 

Mr. MICA. I have three hearings at the same time, exactly as the 

Co-Chair. 

Mr. CONNOLLY. There is no human problem that cannot lend 

itself to a solution with another hearing. I thank the Chairman for 

his understanding. 

Thank you for holding today’s hearing which examines Amtrak’s 

food and beverage service operations. 

In northern Virginia, which I represent, Amtrak operates one of 

its signature long distance carriers, the Auto Train, while injecting 

over $60 million annually into our local economy. For years, Amtrak supported hundreds of well paying jobs for northern Virginia 

residents and we are proud of that. 

We are also here to discuss an Inspector General report which 

advocates that Amtrak implement a number of efficiency initiatives 

to help lower the cost of its food and beverage service. Unfortunately, this hearing is likely to focus on just one of those recommendations, that Amtrak institute a pilot project to eliminate 

middle class jobs performed by dedicated food and service workers 

on long distance trains. 

I have no doubt that long-time advocates of privatizing or eliminating Amtrak might welcome that recommendation, but I have serious concerns, frankly, with the methodology underlining the controversial privatization proposal. 

In arriving at a privatization pilot recommendation, the IG’s entire analysis seems to consist of comparing the labor cost of Amtrak’s long distance, overnight food and beverage service to the 

labor costs of just three other train lines, two of which are small, 

daytime only trains, and a third that is Canadian, replete with a 

labor force that benefits from Canada’s national health care system, a subsidized health care system which we do not have. 

Put more simply, the IG compared, I think, apples and oranges 

to reach a conclusion that I think is of dubious value. It is simply 

baffling that the IG’s report fails to acknowledge that the food and 

beverage service of the Downeaster, a low wage train that operates 

during the day between Boston and Maine, operates at a loss. 

Since losses in food and beverage service are the main problem 

supposedly highlighted in the IG’s report, failure to acknowledge 

that the Downeaster’s food and beverage losses is quite an oversight creating a false impression that the Downeaster’s low wage 

labor approach to staffing food and beverage service is a profitable 

alternative to the current system of Amtrak. 

The IG does not seem to have considered Amtrak’s food and beverage service along the northeast corridor as a comparison in its 

analysis. Had the IG included in the comparison the labor costs of 

Amtrak’s northeast corridor trains, which are equivalent to the 

labor costs of its long distance trains, the IG’s conclusion about the 

49 

advantages of contracting out food and beverage labor in Amtrak’s 

long distance trains might be different. 

This, of course, does not even mention that unlike the low wage 

Downeaster, Amtrak’s north east corridor trains are profitable. I 

am at a loss to understand why these and other significant admissions were not contained in the IG’s analysis. Amtrak management 

has committed to improving efficiency in its food and beverage 

service and this problem has yet to be made. I know the Chairman 

will correctly point that out. 

With initial reform efforts already yielding positive results, Amtrak has already increased sales revenue from its food and beverage service recently reporting ‘‘In inflation-adjusted dollars, Amtrak’s food and beverage loss has been cut by $31 million from $105 

million in fiscal year 2006 to a projected $74 million in fiscal 2013.’’ 

Further, approximately 99 percent of the food and beverage loss 

is from dining car service in long distance trains that Congress requires Amtrak to operate by law. Cafe car services across the system, on the other hand, essentially break even or make a positive 

contribution to the bottom line. 

To be clear, significant work does remain. The IG has correctly 

pointed that out. However, Amtrak management achieved real cost 

reductions in the past five years and I believe they deserve the opportunity to fully implement their five year plan before we start 

second guessing them. 

Furthermore, we must not lose sight of the fact that negative 

headlines highlighting Amtrak’s food and beverage losses from its 

long distance trains’ dining service, nonetheless, overall, business 

is booming. 

For example, in fiscal year 2013, Amtrak sustained steady improvement, achieving a record 31.6 million riders, also representing 

Amtrak’s tenth annual ridership record out of the last 11 years. In 

addition, Amtrak’s long distance routes boasted 4.8 million passengers, the best ridership in the last 20 years. 

Closer to home, my constituents certainly contributed to the 

northeast corridor second best ridership levels in history with 11.4 

million passengers traveling between Washington and Boston this 

year. These impressive accomplishments amount to ticket revenues 

of $2.1 billion for this fiscal year, another record for Amtrak. 

Clearly American support and reliance on passenger rail is alive 

and well in the 21st Century. It would be regrettable if we try to 

retard that progress. 

I look forward to hearing from the workforce this morning. Mr. 

Bateman as a long-time food service worker on Amtrak’s long distance route, you have a unique perspective on how the IG’s recommendations might impact the food service to the customers and 

the real world consequences for middle class workers. 

I also want to thank all of our witnesses for their presence here 

today and Mr. Mica, for your ongoing concern about this issue 

which legitimately needs to be highlighted. I thank you for holding 

the hearing. 

Mr. MICA. Thank you, Mr. Connolly. Thank you for your remarks 

and analysis of the IG report and your particular take on the situation. 

50 

We are going to now switch to questions. I will take the first 

questions. 

I guess it was in October that Amtrak sent out a release about 

a five year plan to try to eliminate the losses in food services. Mr. 

Hall, do you have a copy of that plan you could provide to the committee? 

Mr. HALL. Mr. Chairman, I do not have a copy of the plan with 

me, but we are still in development of the plan. In my opening 

statement, I talked about the six major principles that plan will envelope. 

Mr. MICA. When would you anticipate we will have an affirmed 

plan to deal with and your goal of trying to dramatically reduce or 

eliminate the subsidy, by the end of the year, January, February? 

Mr. HALL. The plan is still being developed right now. We are assigning accountabilities for certain functions under the plan that I 

spoke of. We are putting together a team and working with our 

newly developed business lines as well to incorporate that plan. We 

should have something available shortly after the first of the year. 

Mr. MICA. We heard Mr. Bateman talk about his service and we 

respect that service. We want to make certain that Amtrak employees are adequately compensated and if we do eliminate routes or 

positions, we also have labor agreements that need to be adhered 

to. Would that be your assumption also, Mr. Hall? 

Mr. HALL. We do have labor agreements with all of our union 

employees, yes. 

Mr. MICA. I know if you eliminate some routes, some of the old 

labor contracts I think gave sort a five year payment and also pension benefits. I think some of the newer hires get a three year payout if you eliminate routes. Does that hold true if you eliminate 

these positions? Are they compensated? 

It appears that something is going to have to be done on the employee side if you go to vendors or vending machines or another 

contractor. What happens to the employees? 

Mr. HALL. Mr. Chairman, I would be more than happy to check 

with our labor relations department and get back to the committee 

with those specifics. 

Mr. MICA. I would like to know because we want to make certain 

that those commitments are kept. They have a cost too. If you buy 

someone out with a three or five year contract plus their benefits, 

I think that it is very important we ensure those commitments are 

kept. 

Can you get back to the committee and let me know how they 

are affected and what the potential cost is because labor is one of 

your big things? 

Mr. Bateman, in your testimony you mentioned the safety training you receive and it was in the Inspector General’s report also. 

Amtrak employees receive an initial 21 hours of training in safety 

and emergency preparedness. After that, they must complete 8 

hours every two years? 

Mr. BATEMAN. Yes, sir. 

Mr. MICA. We mentioned the Canadian comparison. In contrast, 

the Canadian passenger railroad employees receive 24 hours of 

emergency training annually. It does not seem you get the same 

amount of training. 

51 

Mr. BATEMAN. If I may, sir, actually we are trained in CPR every 

two years but emergency preparedness is an annual eight hour 

class. 

Mr. MICA. They get 24? 

Mr. BATEMAN. Yes. 

Mr. MICA. I thought I would include that for the record. 

The credit card issue, every time we hold these hearings, whether it is Transportation or other committees, we are still in a pilot, 

we do not have that complete for a cashless system with food service, Mr. Hall? 

Mr. HALL. We did implement onboard credit card transactions in 

2006 shortly after the House committee. 

Mr. MICA. Food service is not complete? 

Mr. HALL. That is for food service. We do have onboard credit 

card availability. We are in the final stages right now of piloting 

a point-of-sale system onboard our trains. The fully integrated 

model, scheduled for delivery from the vendor at the conclusion of 

this year, will have the integrated credit card functionality. 

Mr. MICA. For all food service on Amtrak? 

Mr. HALL. That will be in our lounge car operations. At that 

time, we can pilot the cashless sales. 

Mr. MICA. Again, you are telling me it is partial? It is not complete for food service or planned to be complete? 

Mr. HALL. The POS system is applicable to our lounge and cafe 

car services. Our dining car services require a different service 

model and there is a different technology solution for those. 

Mr. MICA. Someone came to me and said they can pay for their 

vegetables at the weekend market with their credit card. This goes 

on for year after year and we still do not have this implemented. 

I do not want to get into the details of some of the losses we have 

experienced in the past. Again, I just do not think that is acceptable, either not having a written five year plan at this juncture or 

a plan for implementation to deal with credit card purchases. 

The big losses are on the long distance services, correct, Mr. Hall, 

for food service? 

Mr. HALL. That is correct. 

Mr. MICA. Most of those are served meals. We looked at some 

menus. You had this gourmet chef’s conclave. I do not think you 

pay those chefs but have you been able to provide either our committee or the Transportation Committee with information about 

the cost of those conclaves? 

Mr. HALL. I believe that we have, sir. 

Mr. MICA. How much is that? 

Mr. HALL. I believe in the last year, the total expense Amtrak 

bore for the Amtrak culinary advisory team was approximately 

$49,000. 

Mr. MICA. We also looked again at the supposed reductions in 

losses. From 2006 to 2012, you reported a $33 million reduction in 

losses. It appears from the Inspector General report that you have 

actually just transferred money from some tickets to the food and 

service account. That accounts for about 66 percent of the change 

in the losses. We are going from one set of losses to another set 

of losses. Is that what is happening, Mr. Hall? 

52 

Mr. HALL. I think Mr. Alves might want to comment, that was 

in his report. 

Mr. MICA. Okay. 

Mr. ALVES. We reported an increase in revenue and a reduction 

in costs. A significant amount of the increase in revenue came from 

higher volumes as opposed to a change in the accounting process. 

One change in the accounting process was on the northeast corridor where during that time Amtrak made an adjustment in how 

food and beverage is priced in the northeast corridor. 

The most significant cost reduction, as I recall, is re-awarding the commissary contract that reduced costs by about $4.5 million 

in spite of a significant increase in volume. That was a real cost 

reduction. A significant portion of the revenue is real revenue increases. 

Mr. MICA. Again, it says here $22.1 million increased transfers from ticket revenues. Most of that difference between $22 million 

and $32 million is from transfers in tickets. They have included 

some costs for meals but again, with the overall loss, every ticket 

on Amtrak, the more tickets we sell, we are up to 31 million passengers. Every ticket is subsidized with a federal subsidy of $1.3 

billion. Do the math and that is nearly $40. 

We are losing money on the tickets. The Sunset Unlimited, which we used as an example, loses $404 per ticket. Within that we you 

have $55 loss for food service. 

Mr. ALVES. Increased revenue does not equate to a profit. 

Mr. MICA. Mr. Meadows is gone, but he said if you are selling 

the watermelons at a loss, if you continue that, you expand your 

loss. 

Mr. Connolly, we will go to you now. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

You just touched on a fascinating subject. Mr. Alves, I have to 

go easy on you. You are a fellow Bostonian and you like the Red 

Sox. You are a brilliant man. 

Mr. ALVES. Thank you. I appreciate that. 

Mr. CONNOLLY. Talking about subsidies, does Canada subsidize 

its rail service? 

Mr. ALVES. I do not know that. 

Mr. CONNOLLY. Do you have a pretty good guess? 

Mr. ALVES. I would not be surprised. 

Mr. CONNOLLY. Are you aware of any major industrialized country that does not subsidize its rail service? 

Mr. ALVES. No, I am not. I think there is something in Japan 

that I have heard. The subsidy is both operating and infrastructure 

as well. 

Mr. CONNOLLY. I have taken the bullet train from Tokyo to the 

south of Japan. I am pretty sure it is subsidized. I have taken the 

Gran-V in Europe. It is subsidized. By the way, it has wonderful 

service as a result, great food service. It is a great way to go from 

Paris to Brussels or vice versa. It is all subsidized. 

If we talk about whether you can make a train services viable 

without a subsidy, all viable train services, major train services in 

industrialized countries, require subsidies to be viable. There are 

other forms of transportation which my good friend, Mr. Mica, is 

aware of. If we want to talk about subsidies for Amtrak, maybe we 

53 

could talk about subsidies for rural airports in America and look 

at how viable that is. If you want to look at a ticket subsidy, it 

makes this pale by comparison. It really does depend on what we 

are talking about. We cannot only talk about this stuff out of context. 

Could you answer the concern I raised? When you talked about 

the Downeaster, in your report you failed to mention that it operates at a loss. Why that oversight? 

Mr. ALVES. I think we properly qualified our report in addressing 

those issues. We said there is not a direct comparison of those examples to Amtrak but there are similarities. The similarity on the 

Downeaster is that it is a cafe car. Amtrak runs cafe cars on long 

distance routes and in the northeast corridor. 

Mr. CONNOLLY. Wouldn’t it have been useful for someone to understand in full disclosure that you are citing it as an example and 

that it operates at a loss? 

Mr. ALVES. We could have included that. We didn’t think it was 

relevant. I think the reason is that the difference in cost is still 

there. It is an order of magnitude difference in cost. 

Mr. CONNOLLY. I understand your reasoning. I would respectfully 

suggest though since the subject is operating at a profit, operating 

at a loss, how much of a loss, how much loss is desirable, what are 

some models we can look to. I think it would have been a useful 

thing for the IG’s report in full disclosure to point out that when 

looking at that particular alternative, it also operates at a loss. 

Mr. Bateman, you made a point about comparing sort of the intensive labor effort in long distance carrying more to the airlines 

really than a short haul on the East Coast or somewhere. You 

talked about a six day commitment and turn around and actually 

very labor intensive long hours when you are on the train because 

you cannot get off. You have to be serving the customers. 

How important do you think food service is in long distance trips 

like that for the service to continue to attract customers? 

Mr. BATEMAN. I think it is critical. I cannot imagine someone 

riding on the train overnight with vending machines and that sort 

of thing. I do not think it would be feasible. 

Mr. Alves talked about the Downeaster service, comparing it to 

our service. Cafe car to cafe car, our cafe cars are making money. 

The Downeaster does not operate at a profit. If you compared the 

Downeaster to a dining car, of course it is an unfair comparison, 

again apples and oranges. 

Mr. CONNOLLY. Good point. 

Mr. Worley, you talked about the North Carolina experience, I 

took to heart what you said. You had a very important caveat 

which was we cannot approach this as one size fits all. 

Mr. WORLEY. Yes, sir, you are correct. One of the notes I will 

make is we have it on both sides with the Carolinian being 704 

miles, so we do experience with the food service on the Carolinian, 

there is a loss. That is a loss billed to us loss to us from Amtrak 

that the States have to pick up. We feel that and see the need to 

really look at some good options there. 

Mr. CONNOLLY. Thank you. 

Mr. Howell, you represent Smithsonian. Do you ride Amtrak? 

Mr. HOWELL. I have ridden Amtrak, yes. 

54 

Mr. CONNOLLY. Is it your view by virtue of your testimony and 

your being here that you think Amtrak could emulate 

Smithsonian’s outsourcing of food services, that it is a good model 

for them to look at? 

Mr. HOWELL. I am not really someone who can judge that from 

the complexity of their business compared to what I have to run. 

I think the transportation business is quite different than what I 

am involved in. 

Mr. CONNOLLY. So I should not construe your presence here to 

mean anything other than the Smithsonian is a wonderful institution that has some interesting food services and you thought we 

would want to know about them? 

Mr. HOWELL. I would agree with you. 

Mr. CONNOLLY. Thank you very much. That is very important. 

Mr. Hall, you would agree, that they are different services and 

while there might be something to be learned from the 

Smithsonian’s experience, it is not a model for a transportation system like Amtrak as Mr. Howell just said? 

Mr. HALL. I do not believe it is a viable model, a brick and mortar establishment versus the services onboard a train. They are 

quite different. 

Mr. CONNOLLY. I read in my opening statement some extraordinary statistics. My good friend, Mr. Mica, has chaired the Transportation Committee. I had wanted to be on the Transportation 

Committee but I did not get appointed to it so I had to do a bit 

of homework on Amtrak coming here. 

I was surprised by record revenue. To what do you ascribe the 

seeming success in the numbers of Amtrak? Why are we hitting 

records in ridership volume and in some cases, revenue? 

Mr. HALL. Rail is increasingly popular, it is economical, it is environmentally friendly and it is something consumers are actively 

pursuing at this time, especially many of the younger consumers. 

Mr. CONNOLLY. How important is the quality of food service, 

from your point of view, to maintaining those record numbers? 

Mr. HALL. We have done some research on that. For instance, on 

our long distance services, if we were to eliminate the dining car 

service and keep a lounge car type operation on those trains, we 

would lose $93 million in ticket revenue. Those passengers value 

this amenity, they value it greatly. 

Mr. CONNOLLY. Sometimes in business we have a concept called 

loss leader. Sometimes you have to have a loss leader in order to 

get the wider customer revenue. You may or may not break even 

on the particular food service, but it is essential if you are going 

to maintain the ridership is essentially what you are telling us? 

Mr. HALL. Absolutely. We actually saw that on our Acela express 

service in 2005 where we significantly reduced the food and beverage services. We eliminated our hot entrees which are very popular with our passengers and replaced them with basically a basket 

of a very nice gourmet sandwich, chips and water and the erosion 

in ridership, the defection from first class to business class was so 

significant that the loss in ticket revenue far outweighed the savings we made in reduced food and beverage offerings. 

Mr. CONNOLLY. You have to look at that. 

Mr. Alves, I assume the IG recognizes that relationship as well? 

55 

Mr. ALVES. Yes, we do. 

Mr. CONNOLLY. My final question follows up on what Mr. Mica 

was getting at which is there is still progress to be made obviously 

in the cost of food service and in making it easier for customers to 

access that food service like credit cards. 

I want to give you the opportunity, Mr. Hall, to bring us up to 

date on what is ahead in terms of progress in terms of what we 

can look forward to? 

Mr. HALL. Many of the items that Mr. Alves and the OIG 

brought up in the report are the actions we are taking, those incremental improvements to food and beverage. As far as the onboard 

logistics, optimizing our product development and supply chain, implementing additional technologies, we are looking at certain areas 

in labor where we can optimize the workforce, where we can use 

it more efficiently, where we can manage that workforce effectively 

to the demand on that train. 

If I can clarify, we do accept credit cards on all of our trains for 

our food service. We simply have not implemented a cashless pilot 

because the existing technology and POS did not allow that at this 

time. When we receive final delivery of the fully integrated solution, we can pilot cashless. We do accept credit cards on all of our 

food service cars nationwide. 

Mr. CONNOLLY. You are moving toward a cashless system? 

Mr. HALL. That is correct, sir. We hope to implement or pilot 

that shortly after the beginning of next year. 

Mr. CONNOLLY. You will make my young staff happy. I still use 

cash. 

Thank you so much, Mr. Chairman. Thank you to all of you. 

Mr. MICA. Mr. Cummings? 

Mr. CUMMINGS. I want to thank all of you for being here today. 

One of my concerns is always the worker, the people who live in 

my district, are the people who clean the trains. They are the ones 

who take care of folks’ beds in hotels. We have gotten so far away 

and spend so much time making sure business makes big money 

that the worker is making less and less and less. 

There is something about quality of life that concerns me. That 

leads me to you, Mr. Bateman. Among many cost saving measures 

recommended by the Inspector General or a critical one is a pilot 

initiative to test the privatization of Amtrak’s food and beverage 

service. 

As a 36-year Amtrak worker, what effect would privatization 

have on you, your employment and the livelihood of Amtrak food 

service workers? Can you tell us a little bit about these workers, 

typical education, whatever? 

Mr. BATEMAN. For the most part, people do these jobs because 

they want to take care of their families. This is a very arduous job. 

No one would do this without having someone behind you that you 

are responsible for. The hours are grueling, the days are very long. 

A typical employee, I guess, has an average high school diploma. 

We have some adults who have PhD’s. There are different levels 

of education. 

As far as the effect of contracting out, I think it would significantly lower our wages, maybe in half. I cannot see anyone surviving, especially in this area, on $12.50 an hour. 

56 

Mr. CUMMINGS. What about insurance? Do they have insurance 

now? 

Mr. BATEMAN. We have insurance now but I do not see that happening if we have a contractor or if it is contracted out. I do not 

see insurance being a part of the package. 

Mr. CUMMINGS. Inspector General, did you consider insurance 

when you went through your analysis? 

Mr. ALVES. Yes, we did. We considered the benefits provided both 

to Amtrak and the contractors. 

Mr. CUMMINGS. So often what we have seen in the past, I know 

we have the Affordable Care Act which the Republicans are trying 

to destroy, we have that but the fact is I have noticed a lot of times 

workers doing these jobs either have no insurance, when they contract out, that is. When contracted out, they have pitiful insurance, 

if any. 

My father, a former share cropper with a second grade education, 

used to say somebody’s going to pay. The question is who pays 

here? If we contract out, what I have seen is that the contractor 

makes lots of money and the employee makes less money and less 

benefits. 

As a matter of fact, my mother-in-law was working for the Federal Government. She was sitting beside somebody who was making far less with less benefits doing the same job by the way but 

they worked for the contractor. 

Tell me about your analysis and the worker, the nuts and bolts 

person. 

Mr. ALVES. We did compare wages and benefits. You are right 

that in the private sector, there are very few benefits. A couple had 

no benefits, they got the salaries. 

Mr. CUMMINGS. You are talking about contractors? 

Mr. ALVES. The contractors get no benefits. Your point is completely valid. 

Mr. CUMMINGS. When we look at this, Mr. Alves, have you compared the labor costs on Amtrak with those on commuter railroads 

in the United States that provide intercity passenger service whose 

employees generally view their employment as a career rather than 

a seasonal occupation such as a Long Island Railroad or the Metro 

North? If you did not, why didn’t you, but did you? 

Mr. ALVES. No, we did not. We were looking specifically at an alternative to contracting out and within that, specifically at the differences in labor costs. 

Mr. CUMMINGS. Should we rely on the comparison of the three 

trains in your report as the sole basis for eliminating good paying 

jobs? Did I hear you right, Mr. Bateman, when you said your folks 

are making a profit and the Downeaster, you said, is not making 

a profit? You did not say that, did you? 

Mr. BATEMAN. Actually, he compared the Downeaster to our dining cars, not the Downeaster, which is a cafe car service to our cafe 

cars. Cafe car to cafe car, as I testified earlier, we make a profit 

or break even. The Downeaster, from my understanding of the data 

I have seen, is not making a profit. They are paying $10 a hour, 

so I do not see where the benefit is. 

Mr. CUMMINGS. Mr. Alves? 

57 

Mr. ALVES. I would like to respond to where you are going in 

your questioning, whether this is the sole basis for deciding to contract out. I think we were very clear in the report and I would like 

to clarify it right now that we don’t consider that to be the sole 

basis. We consider it to be an indicator that should be looked at 

carefully. 

We identified a number of things that continue to be uncertain, 

including the safety role, the applicability of some of the benefits, 

railroad retirement, FMLA benefits, and the impact on the workforce. Amtrak is a long term employer, has a long term relationship 

with these employees. All of that needs to be considered. 

I would add one other factor which is that we think it is very 

important that Amtrak address the inefficiencies that exist in the 

food and beverage service. We identified six of those. We think that 

is a sample rather than the complete amount of inefficiency. We 

suggest, based on best practices, that Amtrak address those before 

it decides to contract out. 

Mr. CUMMINGS. Last but not least, Mr. Hall, I take it you want 

a chance to do the things they recommended? Do you disagree with 

them or what? 

Mr. HALL. Absolutely. 

Mr. CUMMINGS. How long have you known about these recommendations? 

Mr. BATEMAN. I believe the report was issued at the end of October. All of the recommendations that are in the report for incremental improvement are included in our plan, plus additional incremental improvements that Amtrak already has underway. 

Mr. CUMMINGS. You are trying to execute? 

Mr. BATEMAN. We are trying to execute those. 

Mr. CUMMINGS. What is stopping you? 

Mr. BATEMAN. To do the incremental improvements, nothing is 

stopping us. We are actively engaged and we have worked ongoing. 

We have just completed our reorganization of the company and I 

am actively engaged with our business line general managers in 

addressing the food and beverage laws. 

Mr. CUMMINGS. Do you have a timetable? 

Mr. BATEMAN. In the next five years, sir. 

Mr. CUMMINGS. The only reason I asked that, Mr. Chairman, is 

one of the things I have noticed is a lot of the times if you do not 

set a timetable and deadlines, nothing happens or it does not happen timely. If you have a timetable, I would like to see it. If you 

could get that to us, I would appreciate it. 

Thank you, Mr. Chairman. 

Mr. CONNOLLY. Would my friend yield? 

Mr. CUMMINGS. Of course. 

Mr. CONNOLLY. For clarification, Mr. Hall, in response to the distinguished Ranking Member’s question about do you embrace the 

recommendations of the IG report, I want to give you the opportunity to be accurate. I assume you do not embrace the recommendation about a pilot project to eliminate food service on long 

distance trains? 

Mr. HALL. We do not agree to eliminating food service. 

Mr. CONNOLLY. I just wanted to make that very clear. 

Thank you, Mr. Hall. Thank you, Mr. Cummings. 

58 

Mr. CUMMINGS. I yield back. 

Mr. MICA. We will go to another quick round. 

First of all, Mr. Howell, you are a government operation. I guess 

you come under the jurisdiction of our committee. You do provide 

food service. Does that food service turn a profit? 

Mr. HOWELL. It does. 

Mr. MICA. How much? 

Mr. BATEMAN. In fiscal year 2013, $9 million. 

Mr. MICA. How many visitors did you have? 

Mr. BATEMAN. We served what we call coverers, which would 

have been more than visitors, but about 6 million people. 

Mr. MICA. I brought him here because they are under our jurisdiction, the committee specifically our subcommittee. They do provide this service, do a great job and turn a profit, not that it is exactly comparable to a transportation food service. 

Mr. Worley, you were losing more money and are losing less 

money, is that right? 

Mr. WORLEY. Yes, sir, that is correct. 

Mr. MICA. I brought you here because you have had a loss problem that is State subsidized. The State is picking up the subsidy. 

How much is North Carolina’s indebtedness, do you know? 

Mr. WORLEY. We have a balanced budget and a constitutional 

amendment. 

Mr. MICA. We have a slight difference. We are at $17 trillion and 

going upward. 

I am the strongest advocate for passenger rail in the United 

States Congress. There is no one who will compare with me. I want 

to expand it. I think we are in the Neanderthal stage as far as the 

country. 

As far as employment, I have always guaranteed labor people 

their benefits, anything that is committed to them and maintaining 

that even in future service. For example, you said you increased 

your ridership from 40,000 to what? It was three hundred and 

some percent. Was it 40,000 to 170,000 or something? 

Mr. WORLEY. Yes, sir. 

Mr. MICA. Did that require hiring any additional employees to 

service that many people? 

Mr. WORLEY. No, sir. 

Mr. MICA. Did you diminish anybody’s wages or benefits? 

Mr. WORLEY. No, sir. 

Mr. MICA. But the State picked up the difference and the losses. 

I have no problem with subsidizing transportation at reasonable 

subsidization but always at the lowest cost to the taxpayer, which 

you are trying to achieve, correct? 

Mr. WORLEY. Yes, sir, that is correct. 

Mr. MICA. The reason we did this is I did not ask for this report. 

I asked for a lot of tough reports but this was produced and you 

actually produced, in your report, some ways they could save 

money, right? 

Mr. WORLEY. Yes. 

Mr. MICA. One of those is assigning costs appropriately, getting 

the money in. Overall, I would like to reduce the loss on some of 

these routes. I do not think that is an unreasonable request. 

59 

You gave me your priorities. You did not come to the committee 

with a written plan. It was October when you said you had a plan. 

There is not a written plan. You had an outline of some things. 

Your second point is labor optimization. That is also in your report. There may be some reduction in some number of employees 

when you optimize that. That might happen. Inspector General? 

Mr. ALVES. That is a possibility, yes. 

Mr. MICA. It is a possibility. Mr. Bateman, you came here as a 

strong advocate of having worked a long time and paid your dues 

and all, and speaking on behalf of those who are employed. I asked 

the question what would happen if we lose some of these people. 

Mr. Hall cannot answer. That is not acceptable. A representative 

from Amtrak needs to know how the policies they propose or advocate for making changes will affect their employees. 

I think that is very important and I want you to get back with 

the committee. I want to know how these employees are going to 

be affected. Again, I have always made that commitment to labor 

and will continue that, even as we make the transition. If some positions have to be eliminated, consolidated or whatever, I need to 

know the impact of that. 

I said we are falling further behind. Yes, there are transportation 

systems in rail that make money. Virgin Rail, for nearly ten years 

when they privatized some of the rail in England went from a $300 

million a year subsidy by the UK to $100 million profit. The European Union has an edict that by 2015, the passenger rail in Europe, the state operations, must also compete. 

Italy had already had one open competition. Ferrari took a line 

and makes money on operations. I would include that to also be 

food service. While the government has had to subsidize in Germany, Japan and other areas, the infrastructure, I strongly support 

that. Shame on us for the northeast corridor and the shape it is 

in. We should be investing in that. 

We should have two hour service between here and New York or 

less and we should have triple the number of employees working 

there at your union rates with those benefits. It is a shame that 

we do not do that. We would also un-congest our air corridors in 

the northeast corridor by doing that and catch up with the rest of 

the world I just heard that Rendell and some others are putting together a group. I would like to poll those folks and find out what 

they are proposing to see about getting that service going. Privatepublic partnerships can work and we can increase employment. 

The biggest carrier is not the airlines. They only carry about 

700–800 million passengers a year. It is actually long distance bus 

service. We do not subsidize one meal on that. Some of those are 

long routes. They are on the Stock Exchange and make money. 

They move more people in this country at very reasonable rates. 

Please do not tell me you cannot do it, not that buses are rail and 

all of that. Those are a couple of points I wanted to make. 

The other thing is I see some news reports, I did not cover it and 

I am not picking on you as much as some of these guys. In your 

report, there are the complementary items on the Auto Train. That 

service is into my district by $260,000 in complementary wine, 

cheese and champagne. 

60 

For me to tell people when they are spending their hard-earned 

dollars that we are getting them further in debt and borrowing 43 

cents on a dollar, somehow, some of this has to be revised. The purpose of this hearing is to look at where we can cut costs, do a better 

job and bring that down. 

I held hearings back some years and you cited those. We were losing $100 million a year. In 2012, it was $70 million. I want to 

see that number come down. I think you have some good recommendations we will help you implement. 

I do also want to see the six major proposals for reducing the cost 

in your plan presented to the committee as soon as possible. You 

are going to do that, Mr. Hall? 

Mr. HALL. Yes. 

Mr. MICA. Any estimate of when you can get it to us? 

Mr. HALL. I believe I said shortly after the first of the year. It 

is going to be a dynamic plan. It is in development. 

Mr. MICA. I will give you until the end of February and then we 

will do another hearing. 

Mr. CUMMINGS. Will the Chairman yield? 

Mr. MICA. Yes. 

Mr. CUMMINGS. I have one question. Mr. Chairman, you said 

something a moment ago I was just wondering about. You were 

saying that the bus services are doing extremely well. I am just 

trying to see what the comparison is. It has been a while since I 

rode a bus a long distance. 

Mr. MICA. Maybe you were not here when we were talking about 

transportation services making money, so I cited four rails I know 

of with a subsidization of infrastructure. In the past, they subsidized operations but there has been a turnaround. 

Mr. CUMMINGS. I thought you were aiming at food services. I am 

sorry. 

Mr. MICA. No, but again you can make the comparison. Some of 

them may sell something now on Mega Buses and others which 

have taken over huge markets. I have been on a couple of those. 

They go more to the vending service model. 

Mr. CUMMINGS. Do you do that often, Mr. Chairman? 

Mr. MICA. You would be surprised. I am probably one of the few 

members that sometimes in and takes the bus, Route 41, home. Of 

late, I have announced some grants from the back of the bus, a 

great experience. I just held a big transportation conference or participated in one in central Florida advocating expansion of mass 

transit. With about 400 people in the audience, I asked how many 

came by public transportation. I think maybe two or three raised 

their hands. 

That is another thing we have advocated, working with rail to 

connect with bus. For 15 damned years, they told me we could not 

do it at Union Station. We did it in 15 months because passengers 

who ride rail or bus should not be second class citizens and have 

to drag their luggage down the street in rain, sleet, cold or heat 

and not have an inter-modal facility that is taxpayer supported. We 

helped put a lot of money in that place. 

You go there and I will give you a dozen other locations across 

the country where we are now bringing people together. People in 

this country will use mass transit if it is accessible and convenient. 

61 

If you have them sit at a bus or train stop, an overturned shopping 

cart or inconvenienced and not having access, they will not use it. 

Again, I try to offer positive solutions and I think working together we can do that. This is important. We are in a very serious 

financial situation. While I bust your chops sometimes, it is meant 

to improve the service because we can and we must do better. 

Mr. Connolly? 

Mr. CONNOLLY. Mr. Chairman, first of all, let me, for the record, 

thank you for your support for transit. My region, northern Virginia, has been a beneficiary of your support for the Silver Line extension of rail to Dulles. I personally am deeply appreciative and 

was before I even came to Congress. Your advocacy is something 

very important. It is so great to hear you talk about trying to make 

investments in the northeast corridor so it looks like a 21st Century rail system instead of what it is. 

I agree with you. Concerning the goal on our train ride to New 

York, I would never fly again to New York if we could do that. I 

wish we would and could. I would happily join you any time you 

would like and attempt to make those investments happen because 

I think they are very critical. I think they would be very important 

for the competitive posture, frankly, of this country. 

I was just in Taiwan two years ago. I have been there many, 

many times and I was stunned at the bullet train it built and it 

did not take 50 years to do it. Your point about subsidies is well 

taken. I was only trying to make the point that for most large transit and rail systems, subsidies are a very commonplace thing in 

Asia, Europe and here in North America. 

You are quite right, the principle should be, let us try to get the 

subsidy down to the lowest possible level we can so that we are 

maximizing benefit. Per se, a subsidy does not indicate something 

good or bad. 

Let me ask you, Mr. Hall, talk to us about your federal funding. 

What has happened to Amtrak federal funding in the last three or 

four years? 

Mr. HALL. The amount of federal funding for our operations, our 

operating budget, has been reduced year over year. I do not have 

those exact numbers with me. I would not be qualified to speak to 

that. 

Mr. CONNOLLY. Mr. Alves, do you know those figures? 

Mr. ALVES. I do know that the operating subsidy has been going 

down but I do not have them either. 

Mr. CONNOLLY. Dramatic or modest? 

Mr. ALVES. Reasonably well. I would not say dramatic. 

Mr. CONNOLLY. Somewhere in between maybe? Not trivial 

though? 

Mr. ALVES. Reasonable, yes. 

Mr. CONNOLLY. We listened to Mr. Worley talk about subsidies 

in North Carolina going down, but profit and ridership going up, 

is that correct? 

Mr. WORLEY. Actually, with the 209 that we are going through, 

while our ridership has gone up and our revenues are going up, 

more cost is being allocated to the States. 

Mr. CONNOLLY. So they are paying a little bit more? 

Mr. WORLEY. Yes, sir, we are having to pay more. 

62 

Mr. CONNOLLY. I would only point out that as Amtrak subsidies 

are going down, they have also managed to have increases in ridership, in fact, record ridership, and increases in revenue, in fact, 

record revenue, is that correct? 

Mr. HALL. That is correct, sir. 

Mr. CONNOLLY. So they are doing their bit too. 

This is something the Chairman and I have in common. I was 

late this morning because I had to go to a meeting to celebrate a 

transit victory which is the Phase I of rail to Dulles is going to be 

opening in about a month. It is an interesting lesson. 

When we built Metro here in metropolitan Washington, the federal posture in financing that capital construction was 80 percent, 

the localities had to pick up 20 percent but the Federal Government paid for 80 percent. We built a 108 mile system. 

For the Silver Line extension, which is I think the largest transit 

extension in the United States, from Falls Church to Dulles Airport 

about a 22-mile extension, the federal participation will not be 80 

percent but 16 percent. What are the consequences of that when 

the Federal Government shrinks from its responsibilities? 

We are not talking about North Carolina here; we are talking 

about the Nation’s Capital. We are talking about the premiere airport of the Nation’s Capital, designated by the Federal Government 

as such. What other industrialized capital in the world would say, 

if you think a rail link between your premiere airport and the capital city is a good idea, figure out to pay for it. We are not going 

to pay for it. 

That is how they built the rail line from Charles DeGaulle to 

Paris or from Norita to Tokyo or London to Heathrow. I could go 

on and on. Of course not but we put the burden on the local government to finance this construction project. No wonder it took so 

long. 

It has been from the conception of an idea, I am just spitballing 

here, maybe we need a rail link to this empty airport called Dulles 

and the capital city. That idea first germinated in 1962. We are 

now 52 years later and we are opening phase one. It has been a 

real challenge. 

What are the consequences of that retreat from federal responsibility in terms of investments? We are going to lose a competitive 

edge with lots of other places on this planet who are willing to 

make those kinds of investments. 

I take away from this hearing that we need to be as efficient as 

we can. Where we can be more efficient, where we can identify 

more savings, where some subsidies are perhaps no longer justified, great. I know the Chairman shares this philosophy. We must 

not retreat from critical infrastructure investments if America is 

going to be competitive for the future. 

In many ways, Amtrak in the northeast corridor and rail right 

here in the metropolitan area, especially Dulles Airport, are great 

case studies of how to do it or how not to do it in terms of the 

choices presented to us. 

I thank you all for being here today. I thank the Chairman for 

having this hearing. It is quite thought provoking. I know we will 

revisit the issue in due time. I want to also thank Mr. Cummings 

63 

for his thoughtful participation and his leadership on this committee. 

Mr. MICA. I thank the gentleman. Probably in February. 

Mr. Cummings? 

Mr. CUMMINGS. I will be very brief. 

I also want to thank all of you. 

Mr. Hall, in 2006 you had food and beverage losses of $105 million, right? 

Mr. HALL. That is correct, sir. 

Mr. CUMMINGS. Why was that? That was a lot of money. 

Mr. HALL. The losses in 2006? 

Mr. CUMMINGS. Yes. 

Mr. BATEMAN. The revenues were not meeting the targets at that 

time. We had not yet taken a lot of action to optimize the system. 

Mr. CUMMINGS. What is it now? 

Mr. HALL. The loss in fiscal year 2012 was $72 million. 

Mr. CUMMINGS. How did you make that reduction? You have to 

do better than that but I am just curious. 

Mr. HALL. We took a number of incremental actions. At the time, 

we had already outsourced our commissary operations. We renegotiated the contract with that vendor. Subsequently, we re-bid that 

contract competitively on the open market. We optimized our supply chain and product development. We brought in more consumer 

relevant products. We significantly increased our revenues that we 

brought in per passenger. 

Each one of those steps, a number of individual steps you take, 

reduced the loss. 

Mr. CUMMINGS. Do you have a situation where you get employee 

suggestions as to how to do business more effectively and efficiently? A lot of companies have that. 

Mr. HALL. We do. In fact, right now as the Chief of Customer 

Service, I am sponsoring focus groups and employee research on 

our customer service programs. We are partnering with our labor 

leaders in addressing the food and beverage loss as well. 

Mr. CUMMINGS. Mr. Bateman, I think everyone understands that 

you want Amtrak to do well. You do not want to see them losing 

money every year. If the workers union sat down and said, look, 

Amtrak, this is what we see you could be doing better, more efficiently and effectively so that we could have a win-win situation, 

what would you tell them? I am just curious. Have you told them 

whatever you are getting ready to tell me? 

Mr. BATEMAN. First of all, no one is talking about the progress 

we have made. When I first came to this company, Amtrak was 

only probably recouping about 55 cents on a dollar back in the 

early 1970s and 1980s. Right now, they are getting back about 85 

cents on a dollar as far as their investment. 

As far as food service back in those days, 35 years ago, all our 

efforts to bring down the costs and control waste, I think we have 

made a lot of progress in that area. 

As far as suggestions, first of all, I think we need more supervision on the train. As far as direct supervision, with their budget 

cuts, they had to cut back a lot of direct supervision. I think it 

would really help cut our costs if we had more direct supervision 

on trains. 

64 

Mr. CUMMINGS. What impact would that have, I am just curious, 

direct supervision? 

Mr. BATEMAN. It would free the crews to focus more on customer 

service. As far as customer complaints, if you had a supervisor, he 

could handle a lot of issues that take the crews away from their 

duties sometimes. They could focus on providing service as opposed 

to being distracted to deal with a lot of complaints and that sort 

of thing on the train. 

Mr. CUMMINGS. Did you have any other suggestions? 

Mr. BATEMAN. A small suggestion is we need to be more 

paperless on a lot of levels. We waste a lot of paper. Every day you 

come to work, you with all kinds of different sheets of paper as opposed to verbally telling you things. Each day an employee comes 

to work, he gets three sheets of paper: one for safety rules, one for 

FDA violations and one for customer service tips. As opposed to 

giving every employee every day that type of paper, they should 

just verbalize it to the employee and enforce it that way. 

Also, I think we need to stop changing our schedules so much. 

We spend a lot of money every year on schedules. I do not know 

how many dollars they spend by changing schedules every six 

months. My understanding is that Europe doesn’t change their 

schedules quite so often. They have a basic schedule that stays the 

same. 

Each time you change our schedule by two or three minutes here 

and there, it costs millions of dollars producing schedules throughout the entire system. I think that would save a little bit. 

Mr. CUMMINGS. Were you listening, Mr. Hall? 

Mr. HALL. Yes, sir, I was. 

Mr. CUMMINGS. Again, I want to thank all of you for being here 

today. We still have work to do. I would be interested to see that 

timetable, Mr. Hall, at the end of February. I think that is what 

we agreed on. Is that what you agreed on, Mr. Chairman, the end 

of February for that timetable? 

Mr. MICA. I am hoping they will submit a plan that is acceptable 

and shows a path forward. If we have to do the hearing, we will 

do the hearing and look at it. I like to do roundtables where we 

sit down and see how we can work with them to get things done. 

Again, the only way you get things done around here is to continue 

to hammer away. 

Mr. CUMMINGS. You know I know. You don’t have to tell me. 

Mr. MICA. I may not be the smartest, I may not be the best 

placed, I may not be the most powerful, but I am a persistent bastard. 

Mr. CUMMINGS. Thank you on that note. 

Mr. MICA. In conclusion, I thank our witnesses. We will come 

back and visit this if necessary. We do want to accomplish some 

positive steps. We do want to protect the welfare of the employees 

and the commitment we have made to them. There are many thousands of people who work for Amtrak. 

I have often told Mr. Bateman this story too. Some years ago, 

about 10 or 15 years ago, Amtrak had 29,000 employees. Now I 

think they have 19,000. To me that is not a future. I think we can 

dramatically increase the employment and people can earn good 

wages in good positions. 

65 

We have to be creative. We have to look again at how we expand 

the system, get support and bring America into the 21st Century 

of transportation. There is no reason why we cannot do that with 

people working in the same direction and a positive direction. 

I did not institute the Inspector General’s report but I am glad 

we reviewed it. He has some recommendations and I look forward 

to seeing a written plan, action and steps taken to deal with this 

fairly and try to get the subsidy down as low as possible as we 

have seen in some examples. 

We will leave the record open for a period of ten days and without objection, so ordered, for additional statements. 

Mr. CONNOLLY. Mr. Chairman, speaking of that, could I ask that 

Mr. Hall and/or the Inspector General get back to us for the record 

with an answer to my question and a schedule of the federal subsidies or the federal underwriting of Amtrak over the last say five 

or six years just to see the trend and actual numbers. 

Mr. MICA. I think you will find it is about 15 down to about 13 

but let me say this since you brought that up. Wasn’t the House 

mark about a cutting you in half, about $750 million? 

Mr. CONNOLLY. Yes. 

Mr. MICA. If you think I am tough, if you have to institute a 50 

percent reduction, it is going to make this food service look like 

kiddie play for you with changes in food service. Again, these are 

very difficult times. We have furloughed people, we have had a horrible government shutdown and all kinds of things to contend with. 

We are facing serious financial crises. 

We have to deal with it, have to be prepared. We need to be expanding passenger rail in this country, not contracting this service 

and doing a better a job. That is all we are going to say today. 

Mr. CONNOLLY. I assume the Chairman would agree to my request? 

Mr. MICA. Yes, no problem. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. MICA. Consider it done. 

Mr. HALL. We will get that to you. 

Mr. MICA. We may have some additional questions we would like 

answers to. I think some were mentioned during the hearing. The 

staff will get back in writing. 

There being no further business before the House Committee on 

Oversight and Government Reform, Subcommittee on Government 

Operations, this hearing is adjourned. 

Thank you. 

[Whereupon, at 11:23 a.m., the subcommittee was adjourned.] 

(67) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

68 


Insert offset folio 34 here 86721.034

NATIONAL RAILROAD 

'''',OOlcl',,',L'' CORPORATION 

FEBRUARY 6, 2014 

SARAH VANCE 

ASSISTANT CLERK 

COMMITrEE ON OVERSIGHT AND GOVERNMENT REFORM 

U,S. HOUSE OF REPRESENTATIVES 

2157 RAYBURN HOUSE OFFICE BUILDING 

<OU,.,roTr", DC 20515 

DEAR 

ATrACHED ARE THE ANSWERS TO THE QUESTIONS FOR THE RECORD OI""'TJl"MINIr:: 

TESTIMONY BEFORE THE SUBCOMMITrEE ON GOVERNMENT OPERATIONS 

ON AMTRAK'S AND BEVERAGE 

IF YOU HAVE FURTHER QUESTIONS, PLEASE CONTACT DAVID R. WARREN AT 202-908-4600. 

SINCERELY, 

THOMAS HOWARD 

GENERAL 

ENCLOSURE 
69 


Insert offset folio 35 here 86721.035

Question 1: Please provide a list of all federal subsidies to Amtrak since 2006. 

Based on information provided by the Office of Government Affairs and Corporate 

Communications, Amtrak has received about $12.5 billion in federal funding since 2006 

as seen in the table below. 

Amtrak Federal Funding FY 2006-2013 (millions) 

Fiscal year Operating Capital American Efficiency Total 

and debt Recovery and grants 

service Reinvestment Act 

(ARRA) 

2006 $490.1 $772.2 0 $36.3 $1,298.6 

2007 490.1 772.2 0 31.3 1,293.6 

2008 475.0 850.0 0 0 1,325.0 

2009 550.0 940.0 $56.7 0 1,546.7 

2010 563.0 1002.0 686.2 0 2,251.2 

2011 562.0 922.0 586.2 0 2,070.2 

2012 466.0 942.5 0 0 1,408.5 

2013 441.6 902.2 0 0 1,343.8 

Total $4,037.8 $7,103.1 $1,329.1 $67.6 $12,537.6 

Source: OIG analysIs of Amtrak data. 

Question 2: Please provide a list of how federal subsidies were applied and used in 

Amtrak's budget since 2006. 

Amtrak reported that federal funding was used as follows: 

• Operating: about $3.3 billion was used for train operations and the excess 

operating amount of about $700,000 was used for capital investment 

• Capital and debt service: about $4.9 billion was used for capital investment and 

$2.2 billion for debt service 

• ARRA: about $850 million was used for capital projects for the repair, 

rehabilitation or upgrade of railroad assets or infrastructure and about $450 

million was used for capital security projects, including life safety improvements. 

• Efficiency grants: about $25.2 million for new Centralized Electronic Train 

Control (CETC) in Philadelphia and about $39.6 million for other initiatives such 

as lease buyouts, E-ticketing. quick trax machines, and WiFi on the northeast 

corridor. We could not reconcile the total amount of efficiency grant funding 
70 


Insert offset folio 36 here 86721.036

received to data provided by the Finance Department on how these funds were 

used. The difference was $2.8 million or .002 percent of all Federal funding 

received between fiscal years 2006 and 2013. 
71 


Insert offset folio 37 here 86721.037

Questions for 1"1r. Thomas J. Hall 

Chief of Customer Services 

National Railroad Passenger Corporation (AlvfTR..AK) 

Questions from Chaitman John Mica 

Subcommittee on Government Operations 

Committee on Oversight and Government Reform 

Hearing on: 

'''Reviewitlg Alternatives to Amtrak's Annual Losses in Food and Beverage Service" 

Question 1: Under the current labor contracts, what compensation is provided to employees if 

jobs are eliminated? What is the agreement regardillg years of pay? Vv11at is the agreement 

regardmg benefits and pension? 

Answer to Question 1: 

1. Job Elimination: 

'Except as noted below itl C-2, job elimination (furlough) does not require Amtrak to 

provide compensation to effected employees. Health benefits ate mamtamed for three (3) 

months followmg the month of the qualifying event and then employees may purchase 

contmumg coverage m accordance with COBRA. Amtrak does not provide agreement-covered 

employees with any pension benefits to supplement Railroad Retirement. 

'Job elimination & contracting out - with the exception of food and beverage, the 

contracting out of work is prohibited if it would result in employee furlough. The Amtrak 

Reform and Accoootability Act of 1997 removed this condition from the Rail Passenger Service 

Act and required this language become part of all applicable collective bargaining agreements. 

2. C-2 Provisions (Agreement regarding years o/pay): 

-Compensation as a result of job loss is only due when C-2 provisions are triggered: route 

discontinuance as defined in the Rail Passenger Service Act and some transfers of work to other 

locations (m the ShopCraft agreements). Discontinuance of mtercity rail passenger service is 

met when service on a route falls to less than three (3) times per week. Should this occur, and 

there is job loss or earnings loss as a result, then Amtrak must provide the following: 

i. Up to five (5) years of protection (based on years of service, see below); 100% 

displacement allowance and 100% dismissal (furlough) allowance. Fmal note regatding C-2 

mcome protection: for state supported services, if Amtrak discontmues the route, the full amount 

in the table listed above is due the employee, if the state discontinues the route, only 113 of the 

income protection is due the employee;; 

ii. Health benefits (medical and dental) contmue for the length of the employee's 

coverage of compensation; 
72 


Insert offset folio 38 here 86721.038

iii. or a Separation payment - a dismissed employee could resigu and opt for a lump-sum 

payment involving a sliding scale based on years of service to a max of twelve (12) months at 

thirty (30) days per month (employee must have two (2) years of service); 

iv. Relocation benefits a dismissed employee required to change his point of 

employment and move his residence is entitled to moving, travel and other related expenses. 

3. Years of Service Benefit 

Ot02 o months 

2+t03 6 months 

3+ to 5 12 months 

5+ to 10 18 months 

10+ to 15 24 months 

15+to 20 36 months 

20+ to 25 48 months 

25+ 60 months 

*Employees have the responsibility to find andlor accept work that would reduce the payments 

to their income loss and benefits. 

We are unsure of the cost to eliminate ajob because we have not done such an analysis. 

Question 2: What is the cost to Amtrak for eliminating jobs? Please provide information on the 

cost of eliminating a single job per position. Please provide information on the cost of 

eliminating jobs under possible job elimination plans in the process of implementing the five 

year plan to eliminate losses. 

Answer to Question 2: 

We are unsure of the cost to eliminate ajob because we have not done such an analysis. At this 

time we have no estimates on how much it will cost to eliminate jobs, nor does our plan focus on 

job elimination. Our focus has been related to cost reduction strategies. 

Question 3: How will labor optinlization plans, as a bullet point in the five year plan, affect 

employees? Will positions need to be eliminated or consolidated? If positions are eliminated or 

consolidated, how will that impact employees? 

Answer to Question 3: 

The current optimization plan will reduce employee report times before, after, and in some 

instances during their trips. In the majority of cases; tins plan will reduce expenses, but will not 

eliminate or consolidate positions. In the event that positions were adversely impacted, then the 

2 
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employee would have the right to exercise seniority in accordance with their cutTent labor 

agreement. 

3 
74 


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Questions tor Mr. Thomas J. Hall 

Chief of Customer Services 

National Railroad Passenger Corporation (AMTRAK) 

Questions from Chairman E1ijah Cummings 

Committee on Oversight and Government Refonn 

Hearing on: 

"Reviewing Alte111atives to Amtrak's Annual Losses in Food and Beverage Service" 

Question 1: Please provide a timetable to execute, implement, and complete the Inspector 

General's recommendations. 

Answer to Question 1: 

A specific timeline to execute, implement and complete the Inspector General's 

recommendations is currently being developed. These recommendations are wide-ranging and 

require collaboration fl.-om multiple disciplines. The m~ority of the recommendations will be 

incOl"porated into the Amtrak plan to eli.m.inate food and beverage losses in five years. 

Question 2: Please provide a timetable to execute, implement, and complete the additional 

improvements Amtrak has identified to eliminate losses in five years. 

Answer to Question 2: 

A team of senior leaders from multiple disciplines within Amtral, is working on specific 

initiatives included in our plan to elitninate losses in five years. Each leader is tasked with 

developing specific targets and timelines and are planned to be available by the end of the second 

quarter ofFY2014. 

4 
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Questions for ~fr. Thomas J. Hall 

Chief of Customer Services 

~ational Railroad Passenger Corporation (A:'viTRAK) 

Questions from Chairman Gerald Connolly 

SubcoIll!11ittee on Government Operations 

Committee on Oversight and Government RefolID 

Hearing on: 

"Reviewing Altematives to Amtrak's Annual Losses in Food and Beverage Service" 

Question 1: Please provide a list of all federal subsidies to Amtrak since 2006. 

Answer to Question 1: 

Please see Attachment 1 

Question 2: Please provide a list of how federal subsidies were applied to and used in Amtrak's 

budget since 2006. 

Answer to Question 2: 

During the period of2006 through 2013, Amtrak received 13.1 billion in Federal Appropriations, 

4 billion of which was used for operations. Of that 4 billion, 3.3 billion was used to fund the 

operations of our trains. The excess operating amount of approxinlately $700,000.00 was used 

previously for capital investment. During the same period, Amtrak generated 20.1 billion in 

revenues. 
76 


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ATTACHMENT 1 

Insert offset folio 43 here 86721.043

AMTRAK FEDERAL FUNDING INCLUDING TAXPAYER REYEr ACT fUNDS IN MILLIONS OF CURRENT DOLLARS 

, I OPERATING I I & I 

Total $18,895.9 $13,059.3 (53) $293.1 $11.0 $40.0 $86.0 (11) $80.0 $4,31G.4 $36,581.7 

(1) $9.1 MlLLlON WAS AUTHORIZED BUT NEVER APPROPRIATED. AUTHORITYRESCII\DED IN FY 1974. (2) INCLUDES $350 MIlliON FOR 19:76, $105 MILUON FOR THE TRANSITION QUARTER OF 1976, AND $10 MILLlON FOR NEelP OPERATIONS. (3) INCLUDES $109.7 MILLION APPROPRIATiON PLUS $1.5 MILLION FOR A RAlL PASSENGER TERMINAL. AND FACILITIES AT 6VVI FOR 1976, 

PLUS $25 MILUON FOR THE TRANSITION QUARTER 1976. 

Amtrak Funding History· revised (2).Jds DATA 

$3,937.3 $1,329.1 $41.848.

'1/14/20

Insert offset folio 44 here 86721.044

(4) SECTION 213 OF THE 3RACT OF 1973 PROV!DED FUNDING Of $1,925,484.85 FOR EMERGENCY NEe MAINTENANCE PURSUANT TO SECTION 704(0) 

OF THE4R ACT OF 1tt76, 

(51 INCl.UDE$ $62,5 M!LUON NEe OPERATING GRANT. 

{6) GRJ\NT TO RETIRE WAN GUAAA'\!TEE, 

(7) JNCLUDES $35 MILLION FOR GRADE CROSSINGS, (7A) INCLUDES $31 MILLION FOR GRADE CROSSINGS, 

IlImtrak Fundil1g H16toty· revised (2).xJs DATA 1

Insert offset folio 45 here 86721.045

(B) CAPITAL INCLUDED $20 MILliON FOR LABOR PROTECTION, OF WHICH $10 MILLION WAS RE.PROGRAMMED FOR FYB1 OPERATIONS. 

(9) $15,3 MILLION TRANSFERRED FROM SECTION 505 OF THE 4R ACT OF 1976. 

(10) BLOCK GRANT. 

(11) AMTRAK PUR(;HASEO THE NORTHEAST CORRJDOR FOR $86 MILLION. 

(12) FY 1987 F\.iNDING INCLUDES $7,2.09,352 FROM CONRAIL SECTION 702 LABOR PROTECTION. (i3) SUPPLEMENTAL TRANSFERRED $5 M!UiON FROM REDEEMABLE PREFERENCE SHARES FOR MONTREAlER SERVICE. (14) BLOCK GRANT. . 

(i5) INCLUDES $950,000 TRANSFERRED FROM FHWA FOR SEPTA BRIDGES. 

(16) $4 MIlUON TRANSFERREO FROM AMTRAK UNOBLIGATED BAlANCE FOR WASHINGTON UNION STATION PURCHASE. 

(17)AMTRAK'S APPROPRIATION (PL101-164. 11/21JB9)TOTALED $530 MILLION FOR OPERATING/LABOR PROTECT10N'AND $il5 MILL/ON FOR CAP(TAL. 

UNDER THE BUDGET RECONCilIATION ACT (Pl 12117!89) AND DRUG FUND OFFSET, AMTRAK'S FUNDING WAS REDUCED BY $7,669,000 

FOR OPERAT!NG/LABOR PROTECTION TO $521,111,000 AND $1,426.000 FOR CAPITAL TO $83,574,000. 

(1S)AMTRAKNECIP APPROPRIATION TOTALED $24.6 M!LLlON WITH BUDGET RECONCIUATION ACT AND DRUG FUND OFFSET FUNDING REDUCED BY 

$358,000 TO $24,442,000 

(19) AMTRAK'S APPROPRIATION (P.L. 101-516. 11(05/90) TOiAlED $343.08 MILLION FOR OPERATING/!.A80R PROTECTION, $132 MILLION FOR CAPITAL 

AND $150 MILLION FOR MANDATORY PAYMENTS OF WHICH $133 MILUON WAS FOR RRTA. $7 MILLION FOR RU1AAND $10 MILLION FOR RURT. 

UNDER THE FY 1991 SEQUESTRAilON {5/9/91 MEMO FOR ROMO), AMTRAK'S FUNDING WAS REDUCED By $4,447 FOR OPERAT!NGflABOR PROTECTION 

TO $343.075,553, $1,672 FOR CAPITAL TO $131,1:l9a,12B, $1,729 FOR RRTA TO $132,995,271 AND $221 FOR RURT TO $9,999,779. 

{20} $11 MILLION 'fRANSFERRED FROM NEW YORK STATE UNDER THE INTERSTA1E TRANSFER GRANTS-TRANS!T ACCOUNf AND MADE AVAILABLE TO AMTRAK FOR 

THE WEsrS1DE CONNECTOR RAil LINE PROJECT!N NEW YORK CITY, 

(21) FRA MADE MANDATORY RAILROAD PASSENGER PAYMENiS. (22) AMTRAKNECIP APPROPRIATION TOTALED $179 M!lUON. WITH FY 1991 SEQUESTRATION, FUNDING REDUCED BY $2,3;UTO $178,997,673. (23) INCLUDES $500.000 FOR ILLINOIS DOT HIGH SPEED RAIL STUDY FROM CHICAGO TO ST. LOUIS. 

{24} INCLUDES.f'{ MILLION FOR 30TH STREET STATION DEMONSTRATION PROJECT AND $500.000 FOR NOISE PROBl.EMS BETWEEN READVIUE AND FOREST HILLS, ,\tAo 

(25) INCLUDES SUPPLEMENTAL OF $20 MILLION FOR OPERATJONS AND $25 MILLION FOR CAPITAL, OF WHICH $21 FOR CAPITALIZED OVERHAULSAND 

$4 MILlION FOR PRELIMINARY DESIGN AND ENGINEERING OF RAIL UNK BETWEEN NORTH AND SOUTH STATlONS iN BOSTON, MA.; CAPITAL INCLUDES 

$5.5 MILLION FOR METROPARK, NJ PARKING GARAGE, $500,000 FOR NOISE MfTlGAT10N AT AMTRAK'S SOUTH HAMPTON YARD IN BOSTON. MA. 

AND CAPITAL FUNDS DO NOT BECOME AVAILABLE UNTll7l1f93. 

(26) INCLUDES $700,000 TO COVER 35% OF EST!MATED OPERATiNG LOSSES FOR. SECOND 403(8) TRAIN BETWEEN RALEIGH AND CHARLOTTE, Ne. 

(27) CAPITAl FUNDS DO NOT BECOME AVAli.ABlE UNTlL7/1/94. 

(28) INCLuoes $383 MIlLION FOR OPERAT!ONS, $1 MlLUON FOR LABOR PROTECT,ON, sa MilLION FOR AVOIDABLE LOSSES 

UNDER SECTION 403 (0) SERVICES, AND $150 MILLION FOR MANDATORY RAILROAD PASSENGER PAYMENTS. 

(29) CAPITAL FUNDS DO NOT BECOME AVAH..ABLE UNTIL 711/95. (30) INCLUDES $185 MILLION FOR OPERATIONS AND $120 M1LUON FOR MANDATORY RAILROAD PASSENGER PAYMENTS. (31) PROVIDES UP TO $20 MUiON FOR EMERGENCY LIFE SAFETY REPAIRS AT PENN STATION, AS ALLOWED DURING FY 1995, AS WELL AS FOR 

RECONSTRUCTION OF THE STATION'S SERVICE BUILDING AND AMTRAK CAN TRANSFER NOT MORE THAN $15 MILLION FROM THE CAPITAL GRA."4T TO NECIP, 

CAPITAL FUNDS DO NOT BECOME AVAtLABLE UNTIL 711/96. 

(32) TRANSITION GRANT. (3S) INCLUDES $200 MILLION FOR OPERATIONS FROM FY 1!f97 DOT APPROPRIATIONS ACT AND $22.5 MILllON FOR OPERATIONS FROM THE FY 1997 OMNIBUS 

APPROPRIAT!ONS ACT TO CONTINUE SERVICE FOR 6 MONTHs ON FOUR ROUTES THAT WERE TO BE DISCONTINUED AND $142 MILLION FOR MANDATORY PAYMENTS. 

{54} CAPITAL FUNDS DO NOT BECOME AVAILABLE UNTIL 7/1f97. 

(35) HIGH-SPEED RAIL TRAINSETS AND MAINTENANCE FACILITIES. 

(36) INCLUDES $115 MIl..ll0N FOR NEC!P FROM FY 1997 DOT APPROPRIAT!ONS ACT ANO $GO MILLION FROM FY 1997 OMNIBUS APPROPRIATIONS ACT. 

(37) CAPITAL FUNDS DO NOT BECOME AVAH.ABlE UNTIL 711/98, THE FY 1996 DOT APPROPRIATIONS ACT 1998 PROVIDED THAT CAPITAL FUNDS WILL NOT BD 

DISTRIBUTED TO AMTRAK IF AMTRAKRECENES FUNDS UNDER THE TAXPAYER RELIEF ACT OF 1997. THESE FUNDS, THEREFORE, ARE OMITTED FROM ALL TOTALS!K THIS SHEET 

(36) SECTION 977 OFTHE TAXPAYER RElIEF ACT OF 1997 PROVIDES AMTRAK WITH $1.092 BILUON IN FY 1998 FOR "QUAUFIED EXPENSES' {SECTION Vl7 (el}. 

FUNDS PROVlDED IN MARCH 1996. 

(39) INCLUDES $250 MILUON fOR NECI? OF WHICH $12 MILLION SHAll BE FOR THE PENNSYLVANIA STATION REDEVELOPMENT PROJECT. 

(40) FY 1999 CONTINUING RESOLUT10NS 1 THROUGH 6 FOR OPERATlNG. 

(41) FY 1999 APPROPRIATION $609.23 MILLION FOR CAPITAL LESS $20.431 FROM CONTINUING RESOLUTIONS FOR OPERATING LEAVING $566.799 MILLION FOR CAPJTAL 

ONLY 40 PERCENT OF APPROPRIATION AVA/LAaLE FOR FY1999. 

{42) SECTION 977 OF THE TAXPAYER REUEF ACT OF 1997 PROVIDES AMTRAK WITH $1.092 BlLUON IN FY 1999 FOR "QUAlIF:ED EXPENSES" (SECTION 977 (e». 

FUNDS j:lROVIDED IN MARCH 1999. 

(43) NO MORE THAN $228,400,000 IN CAPITAl.. FUNDS MAY aE OBLIGATED PRIOR TO SEPTEMBER 30, 2000. (44) NO MORE: THAN $206.590,000 IN CAPlTALFUNDS MAY BE OBUGATED PRIOR TO$EPTEMBER 30,2001. FY 2001 APPROPRIATION $521,476,000 LESS $1,14'1.247 

FROM P.L. 10&.554 REQUIRING R.ECIS!ON OF 0.22% FROM DISCRETiONARY BUDGET AUTHORITY. 

{45; FY 2002 SUPPLEMENTALAPPROPRIAT!ONS (P,l. 

(46) INCLUDES $100 MILl-ION FROM THE FY 2002 DOD APPROPRIAT!ONS ACT FOR CAPITAl IMPROVEMENTS TO ENHANCE THE SAFETY AND SECURITY OF THE 

AMTAAK-OWNED NEW YORK TUNNELS AND $5 MILLION FOR ADDITIONAL eXPENSES RELATED TO SEPTEMBER 11, 2001. 

(47) SECTION 601 OF FY 2003 CONSOUDATED APPROPRIATIONS RESOLUT!ON IMPOSES A 0.65 PERCENT REDUCT!ON IN ALL DISCRETIONARY ACCOUNTS, 

TOTAL GRANT REOUCED TO $1,043.175,000; OPERAT(NG GRANT TO $518,607,000; NEe MAlNUNE CAPITAl GRANT TO $293,Oa2,5OO AND GENERAl CAPiTAL TO $231,465,500. 

(48) SECTION 168 OF ONISION H OF FY 2004 CONSOLIDATED APPROPR!ATIONS ACT IMPOSES A 0.59 PERCENT REDUCTION ON AlL APPROPRIATIONS IN THE ACT. 

ON ALL APPROPRIAT:ONS. 

Amtrak Funding Hi9\my. revised \Z},x)s DATA 1
Æ 


Insert offset folio 46 here 86721.046

AMTRAK GRANT REDUCED TO $1,203,296,000; OPERATING GRANT TO $711.264,000; CAPITAL GRANT TO $492,032,000; WlTH $4,000,000 (REOUCED TO $3,968,000) 

WIYl-IHELD FROM CAPITAL GRANT FOR AMTRAK ASSET VALUATION STUDY, 

(50) SEC110N 540 OF O!VISION B OF THE FY 2005 CONSOLIDATEO APPROPRIATIONS ACT IMPOSES A 0.8 PERCENT R2SCISS!ON ON ALL APPROPRiATIONS. FRA W!THHELO FROM 

CAPITAL GRANT $4,000,000 (REDUC!:DTO $3,968,000) FOR AMTRAK ASSET VALUATION STUDY AND METHODOLOGY FOR DETERMINING AVOIDABLE AND FULLY ALLOCATCD COSTS 

(51) THE FY 2006 DEPARTMENT OF DEFeNSE APPROPRlATIONS ACT IMPOSES A 1.0 PERCENT RESCISSION ON AI..LAPPROPRIATIONS. 

AMTRAK GRANT REDUCED TO $1,301,850,000; OPERATING GRANT TO $485,100,000; CAPITAL GRANT TO $772,200,000; AND $45.000,000 REDUCED TO $44,550,00Q. PLEASE SEE NOTE 57 

(52) $5 MILLION SHALL BE EXPENDED FOR THE DEVElOPMENT AND IMPLEMENTAT!ON OF A MANAGERfALCO$T ACCOUNTING SYSTEM,$40 MILLION IS AVAILABLE FOR EFF1C!ENCY INCE

GRANTS TO AMTRAK. THESE AMOUNTS WERE REDUCED BY THE RECISSION (NOTE 51) TO $4,950,000 AND $39,600,000 RESPECTIVELY. THE. $39,600,000 WAS ALSO REDUCED BY $8,2173

DELETION OF THE EXPRESSiRAK DEMONSTRATION. 

(53) TOTALS EXCLUDE THE $199 MILUON IN CAPITAL FOR 1998 THAT WAS SUBJECT TO TKE SITUATION OESCR!8ED IN NOTE 37_ 

(54) $772.2 MILUON IS PROV1DED FOR CAPITAL AND DeST GRANTS. 

(55) $650.0 MILLION !S PROVlDEO FOR CAPITAL GRANTS AND DEST SERVICE. OF THIS $850 MILLION 

(n) NOT MORE THAN $285 MILLION MAY BE USED FOR DEBT SERVICE; (b) $35 MILLION OF CAPITAL FUNDS ARE TO BE W!THHELD UNTIL AMTRAK HAS ACHIEVED QPERATlONAL SAVINGS AND MET RIOERSHfP AND TARGETS; and 

(I;) $.5 MILLION SHALL BE EXPENDEO FOR TilE MANAGERIAL COST ACCOUNTING SYSTEM, 

(56) TO FUND LIQUIDATION OF PRIOR YEARS' LOAN GUARANTEES INCLUDING $880 MILUON IN PRINCIPAL AND $239,6 MILLION IN UNPAID ACCRUED INTEREST 

Am\rel( Fvnmng History - revlsarl (2).x1s DATA 1