Audit finds MD Transit Administration overpaid for MARC service

Daily Record, The (Baltimore), Jul 5, 2005 by Dori Berman

The Maryland Transit Administration overpaid at least one of the two companies under contract to operate the MARC commuter trains, according to a recent audit report.

A report released last month by the state Office of Legislative Audits found an overpayment of $325,000 to Amtrak, discovered in 2003 by an accounting firm hired by MTA, had not been reconciled. Another overpayment of $529,000 occurred in January 2005, the firm reported to the auditors.

Amtrak operates the commuter train's Penn Line and CSX operates the Camden and Brunswick lines. The companies own the rail lines on which the MARC trains run, and they maintain and repair some of the MARC equipment.

The audit also found the MTA did not verify charges of about $1.2 million assessed by Amtrak for extra mileage. The company's contract with the state entitled it to additional payment if mileage for one year exceeded 3.85 million service miles. While Amtrak billed MTA for extra mileage, the agency had not actually monitored the mileage and therefore could not verify if the $1.2 million bill was valid.

During contract negotiations with Amtrak, the MTA renewed the contract 10 times without gaining Board of Public Works approval, according to the report. The unapproved extensions totaled more than $40 million paid to the company from 2002 to 2004.

In November 2004 the Board of Public Works approved a $78 million contract with Amtrak for the period from December 2004 to in December 2006.

Meanwhile, the audit also said MTA did not sufficiently analyze conditions that settled a dispute with CSX, also resulting in payment of $1.2 million.

CSX's contract expired last week, and the company is now operating under an extension approved by the Board of Public Works, according to MTA spokesman Richard Scher. Negotiations on a new five- year, $190 million contract with CSX are almost complete.

In a written response, state Transportation Secretary Robert L. Flanagan agreed with the recommendations made by the auditor. He said the MTA would take action to recover overpayments and establish a system to monitor mileage. The response also said the MTA would retroactively submit the contract extensions to the Board of Public Works for approval.

These are extremely complicated contracts to operate extremely challenging services. This is not a very easy issue, Scher said.

With regard to the specific findings, I think clearly this demonstrates the difficulty in interpreting contract language. We do agree with the recommendations and we've already begun to act on those.

The audit report also found deficiencies in the security of the MTA's information systems, vehicle usage and payroll system.

While all of the findings in the report require attention, Legislative Auditor Bruce A. Myers said the rail contract issues are the most pressing.

It's a lot of money involved, and it's overpayments and it's a lack of following some of the state rules, he said.