Amtrak costs individual States almost $100 million per year on commuter rail contracts that private companies can more efficiently fulfill, according to a new House committee report. What's more, the report faults Amtrak for trying to thwart competitors with "frivolous" lawsuits rather than beat them in the market.
“Amtrak is a highly subsidized, Soviet-style rail system, but despite every ticket being underwritten nearly $50 by the taxpayers, Amtrak is an absolute failure in competing with the cost-effectiveness and level of service provided by the private sector," said House Transportation Committee chairman John Mica, R-Fla., in a statement on the report.
Mica was responding to Amtrak's attempt to provide commuter rail service between cities within the same state -- an expensive proposition because "States cover the cost of Amtrak operations" in that scenario, the report explained. When the agencies that operate the intrastate commuter rail systems use private contractors, they save $107.8 million annually. The House report noted that's an 11.5 percent savings compared to contracts operated by Amtrak. If States relied more on private competition, the report estimates, they could save up to $91.3 million annualy.
House investigators found that Amtrak and its union responds poorly to defeats at the hands of private companies. "We know that when Amtrak has lost competitive bids, it has tried to retaliate against the winning bidders in efforts to stifle competition,” Mica said.
For instance, Amtrak filed a lawsuit against Veolia Transportation after it lost out on a commuter contract in Florida, alleging that Veolia had somehow gamed the system by offering jobs to Amtrak employees who weren't even in Florida. After five years of legal wrangling, a jury sided with the private company and refused to award Amtrak any damages. But financial damage had already been done to Veolia and to taxpayers alike.
Finally, Amtrak refused to allow VRE engineers to ride with Amtrak crews to learn
"Amtrak spent $2.1 million on the litigation and forced Veolia to spend approximately $3 million to defend itself, an amount that represents a substantial portion of its profits from the contract," the committee report explains.
When Amtrak lost out on another bid to operate the Virginia Railway Express in 2009, "it reportedly interfered with the transition to the winning bidder, Keolis," so much so that VRE officials began exploring legal action that could be taken against Amtrak."
In the fight against Keolis, Amtrak management and labor were in agreement. As Amtrak made it more difficult for Keolis train crews to work out of Union Station and other Amtrak properties, "Amtrak's union allegedly told its workers they would be fired by Amtrak and blacklisted if they took a job with Keolis to operate Keolis's trains on the line," the report states. "Finally, Amtrak refused to allow VRE engineers to ride with Amtrak crews to learn the route."
Rep. Bill Shuster, R-Penn., reminded Amtrak that such activity is not productive. “Competition can and does save money and offers significant benefits to passengers and taxpayers,” the Railroads, Pipelines and Hazardous Materials Subcommittee chairman said in his statement on the report.