[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





 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





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington             ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming           DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia                 PETER WELCH, Vermont
THOMAS MASSIE, Kentucky              TONY CARDENAS, California
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan        Vacancy
RON DeSANTIS, Florida

                   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                GERALD E. CONNOLLY, Virginia 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
THOMAS MASSIE, Kentucky              Vacancy
MARK MEADOWS, North Carolina


















                            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

 
                  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.
    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 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 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.
    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.
    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:]



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    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 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:]



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    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 award-winning 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 
cedar-planked 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.
    If you have any questions, I would be pleased to answer 
them.
    Thank you.
    [Prepared statement of Mr. Howell follows:]



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    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 State-supported 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.
    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:]



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    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 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:]



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    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 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.
    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.
    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?
    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 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.
    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?
    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.
    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?
    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.
    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.
    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. Private-public 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.
    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. 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.
    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 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.
    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.
    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.]


                                APPENDIX

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