Amtrak’s plans to cut costs and consolidate staff/functions in a Delaware building it purchased for $41.1 million in May 2020 “did not materialize because it did not actually audit the feasibility of its plan before making 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 began planning its Unified Operations Center program in December 2018, “a multi-year effort to relocate several vital service functions customer service” — including train dispatch personnel who are currently dispatched to Boston, New York, Chicago, Wilmington and Washington, D.C. — “in a centralized ‘peak’ center.” While considering various cities for the hub, Amtrak chose Wilmington, Del.
The initial business case for the Unified Operations Center, submitted in 2019, also called for the relocation of a “small specialized group” within the Amtrak Police Department, already based in Wilmington, and a small group social media manager. Part of Amtrak’s intent, OIG said, was “to improve communication and collaboration between dispatch, police and social media personnel, particularly during an incident or delay.” . Additionally, staff housed in rented facilities in Washington, DC and Atlanta, Georgia, would carry out the move.
Another reason for moving staff to the new building, the OIG said, was to mitigate flooding risks at the current National Consolidated Operations Center, which sits near the Christina River in Wilmington.
Amtrak’s original business case for the Unified Operations Center program “included key assumptions that were neither validated nor correct,” the OIG said. Among them:
• The building was purchased before it had been validated that it could “reasonably meet” program requirements, including the need for a dispatch theater and police communications and emergency backup power.
• When Amtrak presented its initial business case, “there were already indications that co-locating all functions and train dispatch personnel would not materialize,” the OIG noted. “Specifically, company officials had determined that they would not be moving Boston-based dispatch personnel and some personnel to New York. In 2021, the company further reduced the UOC [Unified Operations Center] the scope of the program to exclude dispatchers based in Chicago and the rest of those in New York. In May 2021, the company planned to move about 40 dispatchers from outside Wilmington, an 83% reduction from the 250 originally planned. Company officials told us they made these decisions for business, logistical or labor relations reasons, such as maintaining the New York co-shipping agreement with Long Island Rail Road.
• In its initial business case, Amtrak “recognized that most of the IT staff it planned to relocate would not be willing to relocate to Wilmington or, as a contractor, would not be eligible to relocate; therefore, he assumed that he would replace over 400 (86%) at this location. Senior IT leaders told us that the assumption of moving or replacing these IT staff was not feasible in 2019 or now, primarily due to the significant operational disruption that would result from the loss of so many people with company-specific technological knowledge. Instead, IT managers estimate they will likely move 25-35 IT positions that directly support the UOC. [Unified Operations Center] program.”
• The projected savings of $50 million was not accurate. “The largest planned cost reductions were those associated with reducing IT rented office space in Washington, D.C. and Atlanta, which the real estate department estimates would save nearly $50 million. dollars,” according to the OIG. “Early in the planning process, it became clear that the anticipated rental savings from staff relocation were unrealistic when the company determined that moving or replacing so many IT staff would have caused a significant operational disruption.
Business Case Update
Amtrak began updating its business case in April 2021 “to reflect actual expenditures to date and will revise certain assumptions regarding infrastructure costs and the personnel it plans to house in the new facility,” it said. reported the OIG. However, Ministry of Finance officials told the OIG that they “should wait for more information from the design company before completing the update. The design company identifies and validates program requirements, determines how to modify and modernize the building accordingly and estimates what it will cost, and expects the design firm’s first phase of work to be completed in the spring of 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 of his updated business case regarding UOC [Unified Operations Center] program functions and staff moves, and the accuracy of estimates of associated costs and benefits, so that decision makers can determine if and how to proceed.
Commenting on a draft of the report, Naparstek said, “Amtrak agrees with the OIG’s recommendation. We are currently in the process of updating the business case before finalizing decisions on how best to meet future business needs. The scope of the UOC [Unified Operations Center] Amtrak’s Property Consolidation Program and Program are being reassessed to reflect changes to the work environment as a result of the COVID pandemic. Maintaining business continuity for critical dispatch functions by mitigating the risk presented by the facility’s current location in a flood plain remains the primary objective of the program. Opportunities to improve operational efficiency and customer service are also being assessed. The sponsor of the program, (Associate Vice President/Network Support [Anthony Flynn]) coordinate with the Assistant Vice President/Financial Planning and Analysis [Maegan Keane] to ensure that the UOC [Unified Operations Center] follows the latest guidelines for developing a thorough business case in support of any future funding requests. The target completion date is September 30, 2022.