Amtrak’s plans to save costs and consolidate personnel/functions in a Delaware building it purchased for $41.1 million in May 2020 “have not materialized because it didn’t effectively verify the feasibility of its plan before it made the purchase,” according to a new report from the Amtrak Office of Inspector General (OIG).
The report—released May 13 with redactions “due to its sensitive nature”—explained that Amtrak in December 2018 began planning its Unified Operations Center program, “a multi-year effort to relocate several vital customer care functions”—including train-dispatching personnel who are currently spread across Boston, New York City, Chicago, Wilmington, and Washington, D.C.—“into a ‘leading-edge’ centralized center.” While it considered various cities for the center, Amtrak selected Wilmington, Del.
The Unified Operations Center’s original business case, presented in 2019, also included the relocation of “a small, specialized group” in the Amtrak Police Department, which is already based in Wilmington, and a small group responsible for social media. Part of Amtrak’s intent, OIG said, was “to improve communication and collaboration among dispatching, police and social media personnel, especially during an incident or delay.” Additionally, personnel housed in leased space in Washington, D.C., and Atlanta, Ga., would make the move.
Another reason for moving personnel to the new building, OIG said, was to mitigate flooding risks at the current Consolidated National Operations Center, which is near the Christina River in Wilmington.
Amtrak’s original business case for the Unified Operations Center program “included key assumptions that were not validated or correct,” OIG said. Among them:
• The building was purchased before validating it could “reasonably accommodate” program requirements, including the need for a dispatching and police communications theater and for emergency standby power.
• When Amtrak presented its original business case, “there were already indications that collocating all train-dispatching functions and personnel would not materialize,” OIG pointed out. “Specifically, company officials had determined that they would not relocate dispatching personnel based in Boston and some personnel in New York City. In 2021, the company further reduced the UOC [Unified Operations Center] program scope to exclude dispatchers based in Chicago and the balance of those in New York City. As of May 2021, the company planned to relocate approximately 40 dispatchers from outside Wilmington—a reduction of 83% from the 250 originally planned. Company officials told us they made these decisions for commercial, logistical, or labor relations reasons, such as maintaining the co-dispatching arrangement in New York City with Long Island Rail Road.”
• In its original business case, Amtrak “acknowledged that most of the IT personnel it planned to move would be unwilling to relocate to Wilmington or, as contractors, would be ineligible to relocate; therefore, it assumed that it would replace more than 400 of them (86%) at that location. Senior IT officials told us the assumption to relocate or replace these IT staff was not feasible in 2019 or now, primarily because of the significant operational disruption that would result from losing so many people with company-specific technology knowledge. Instead, IT officials estimate they will likely relocate 25 to 35 IT positions that directly support the UOC [Unified Operations Center] program.”
• The predicted savings of $50 million was not accurate. “The most significant anticipated cost reductions were those associated with reducing IT-leased office space in Washington, D.C., and Atlanta, which the Real Estate department projected would save close to $50 million,” according to OIG. “Early in the planning process, it became clear that the projected lease savings from relocating personnel were unrealistic when the company determined that moving or replacing so many IT staff would have caused significant operational disruption.”
Business Case Update
Amtrak began updating its business case in April 2021 “to reflect actual spending-to-date and will revise certain assumptions about the infrastructure costs and the personnel it expects to house in the new facility,” OIG reported. However, Finance department officials told OIG that they “will have to wait for more information from the design firm before completing the update. The design firm is identifying and validating the program requirements, determining how to modify and retrofit the building accordingly, and estimating what this will cost. It anticipates that the design firm’s first phase of work will be complete in spring 2022.”
The OIG report recommended that Executive Vice President/Service Delivery and Operations Scot Naparstek, in coordination with Chief Financial Officer Tracie Winbigler, “verify the assumptions in its updated business case about the UOC [Unified Operations Center] program’s functions and staff relocations, as well as the accuracy of the estimates of the associated costs and benefits, so decision-makers can determine whether and how to proceed.”
In commenting on a draft of the report, Naparstek said: “Amtrak agrees with the OIG recommendation. We are currently in the process of udpating the business case before finalizing decisions on how best to meet the future needs of the business. The scope of both the UOC [Unified Operations Center] program and Amtrak’s Real Estate Consolidation program are being reevaluated to reflect changes to the working environment in the wake of the COVID pandemic. Maintaining business continuity for critical dispatching functions by mitigating the risk presented by the current facility’s location in a flood plain remains the primary objective of the program. Opportunities to improve operational efficiency and customer care are also being evaluated. The program sponsor, (Assistant Vice President/Network Support [Anthony Flynn]) will coordinate with the Assistant Vice President/Financial Planning & Analysis [Maegan Keane] to ensure that the UOC [Unified Operations Center] program follows the latest guidance in the development of a thorough business case in support of any future funding requests.” The target completion date is Sept. 30, 2022.