Candace BarnetteAmtrak’s contracting process has vulnerabilities that could lead to fraud and overpayment, according to a new Office of Inspector General (OIG) report released July 2. The findings come as Amtrak receives increased funding from the Infrastructure Investment and Jobs Act (IIJA), highlighting the need for better oversight of these investments.
According to the report, company efforts to award contracts begin with three phases: pre-solicitation, solicitation and pre-award. Together, they are referred to as the pre-award phase, where Amtrak refines its needs and then takes them to market. The report mentions that any errors during this phase could result in overpayment for goods or increased risk of fraud.
The objective of the report was to identify any errors or areas for improvement during the pre-award phase. The OIG analyzed files from fiscal year 2023, including 20 awarded contracts totaling $408 million. They also interviewed dozens of contract officers and managers in charge of these contracts.
While some methods were viable, the report found two major areas of vulnerability that left Amtrak possibly exposed to higher costs for goods and services, along with opportunities for fraud.
According to the OIG, Amtrak must first better follow established requirements for preparing cost estimates and managing the committees that review them. Of the projects reviewed, the
OIG found 16 that required a cost estimate, six that didn’t gather enough details for the estimate and three that did not have one on file at all.
The report also found that the committees responsible for evaluating these proposals did not follow best practices. In as many as one-third of the contracts the OIG reviewed, committee members did not follow correct protocol. This included documenting possible conflicts of interest and changes in the committee roster.
The second major improvement area is fraud prevention. The report found that typical leading business practices collect enough data about potential vendors to spot possible fraud patterns, but Amtrak did not collect enough data or structure it in a way that would better enable them to spot suspicious activity, including collusion between bidders.
The report also found that employees in charge of these areas had not received adequate training to detect possible fraud schemes. According to the report, this could lead to an increase in costs due to unfair bidding practices.
The report recommends that Amtrak implement the following changes:
- Assess all bids for compliance with company requirements.
- Develop new protocols for contract officers regarding estimate details.
- Better collect and analyze vendor data to detect possible fraud indicators.
- Issue additional fraud training for relevant employees.
Amtrak agreed with all four major recommendations from the OIG report. The company laid out plans for improvement in all referenced areas, including conducting additional audits of compliance processes and launching data collection efforts to better identify fraud. The target completion date for these improvements is Dec. 31, 2026.
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