Objective

To determine the extent of implementation of the 12 recommendations included in our initial audit report, Rolling Stock Programs Department – Selected Aspects of the M9 Rail Car Project Management (Report 2020-S-50).

About the Program

The Metropolitan Transportation Authority (MTA) is a State public authority created pursuant to Article 5, Title 11 of the Public Authorities Law. One of the MTA’s six agencies, the Long Island Rail Road (LIRR) is one of the oldest commuter railroads still in operation today with a charter dating back to the 1830s. LIRR maintains over 700 miles, serves 126 stations, and transports more than 200,000 weekday commuters across its system as of June 2023. It remains an important transportation artery for the New York region.

On September 18, 2013, LIRR awarded a contract to procure new M9 rail cars. The procurement is managed by LIRR’s Rolling Stock Programs Department’s nine employees, with the assistance of subject matter experts representing LIRR’s operating departments. The contract included a firm initial base order of 92 cars with options for an additional 584 M9 cars for LIRR and/or Metro- North Railroad. (Metro-North Railroad later dropped out of the contract.) In July 2017, LIRR exercised its first option for an additional 110 cars for a total of 202 LIRR M9 cars. The cars are assembled at the contractor’s plant in Lincoln, Nebraska, with final assembly in Yonkers, New York. The first M9 rail car entered revenue service on September 11, 2019. The project is funded through MTA’s capital program, with the base order of 92 cars funded by $354.8 million from the 2010-2014 Capital Program. The optional order of 110 cars was funded for $368.8 million from the 2015-2019 Capital Program.

The objective of our initial audit, issued on March 25, 2022, was to determine whether LIRR’s Rolling Stock Department managed the M9 contract so that the contractor delivered the cars on time, within the required scope and quality, and within budget. The audit covered the period from September 2013 to November 2020. Specifically, the audit found that the contractor was behind schedule in the delivery of the 92 base cars by almost 3 years and over budget by $8.9 million. In addition, LIRR had not assessed or collected liquidated damages of $5.5 million from the contractor for delays as of September 2020, and accepted 62 rail cars with deficiencies under a Conditional Acceptance contract clause. Further, we noted the deficiencies were not corrected timely and did not always comply with the All-Agency Contractor Evaluation Guidelines, as LIRR failed to send written notification to the vendor about the less-than-satisfactory performance. Since our initial audit was issued, 110 additional M9 cars have been conditionally accepted as of July 2023. According to LIRR officials, they expect to conditionally accept the remaining cars by May 2024.

Key Findings

We found that MTA LIRR officials made some progress in addressing the issues we identified in the initial report. Of the initial report's 12 recommendations, three were implemented, three were partially implemented, and six were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of this report to provide information on any action planned to address the unresolved issues discussed in this follow-up.