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Amtrak’s purchase of a building in Wilmington, Delaware, for the massive sum of $41 million, was based on “significant but flawed assumptions”, according to the agency’s internal watchdog which criticized purchase in a report.
The Amtrak Inspector General’s Office said the purchase of the building for a Unified Operations Center (UOC) program in President Biden’s home state was “largely based on two important assumptions. but erroneous”.
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These assumptions were, first, that it could centralize its dispatch and policing teams, while bringing in its IT staff from rented offices. The second, related assumption was that the purchase would save money to the tune of $50 million.
“Neither materialized because the company did not effectively test the feasibility of centralizing these staff and functions, including upgrading the building to accommodate significant IT needs before purchasing the building. “, says the report.
The plan was to move the dispatchers, currently working not only in Wilmington but also in Boston, New York, Chicago and Washington DC, into one consolidated building. It would also bring in IT staff from Atlanta and Washington DC, which would save money on rented space.
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The building was purchased in May 2020, but auditors found this was done “before ensuring the building could accommodate its UOC program and other business needs, which not only impacted its estimated long-term savings, but also introduced additional risks.” Items such as emergency backup power and police dispatch and communications needs were not adequately considered.
The report also revealed that the company had to reduce the scope of the functions it was combining, “calling into question whether the UOC program will unify operations as the company intended.” The number of dispatchers displaced has been reduced from 250 to just 40, and the number of IT employees displaced will be between 25 and 35, down from 400 originally estimated.
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Additionally, the report found that the savings forecasts from the move were inaccurate and at the start of the project, they turned out to be unrealistic.
The report says Amtrak is updating its business case with more specific information and has taken a number of steps to prevent similar events from happening in the future – including updating guidance on the how to develop better business cases in the future and the check to make sure the proper approval is sought first.
“Such steps will also better position the company to make informed decisions as it prepares to execute at least $22 billion of cash earmarked for it in [the Infrastructure Investment and Jobs Act] to modernize its assets and improve its infrastructure,” the report states.
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