Contracting Commuter Rail Services, Volume 1: Guidebook (2018)

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48 This chapter summarizes case study research to understand the factors that influence decisions to use different approaches for service delivery for commuter rail. Case Study Commuter Rail Systems Case study research provided an opportunity to review different approaches for delivering services for 10 commuter rail systems. Table 13 lists the 10 case study systems and the different approaches for commuter rail services. Appendix A in this guidebook presents case study summaries for each of the 10 commuter rail systems listed in Table 13. The case study summaries provide additional documentation for factors that influence the decision to directly operate and maintain or contract the primary functions for commuter rail. Factors That Influence the Decision to Contract Based on findings from the case study research, several factors influenced whether a com- muter rail agency considers contracting part or all of the primary functions to provide com- muter rail service. Four key factors that influence this decision are: • Ownership or control of the railroad; • Commuter rail agency governance; • Agency capability and capacity to perform the primary functions for commuter rail; and • Railroad employee considerations. Ownership or Control of the Railroad A private freight rail company (Class I or short line), the intercity passenger rail operator, a state department of transportation, or another commuter rail agency where track is shared may hold the ownership or control of the railroad. The owner of the railroad may set requirements for which functions the owner will continue to provide as a condition for access to the track or may place restrictions on what or how the commuter rail agency will provide the related func- tions of commuter rail. The following examples help illustrate how railroad ownership can affect this decision: • ACE. The freight railroad UPRR owns, maintains, and dispatches the entire commuter rail corridor, except 4 miles from the UPRR Santa Clara junction to San Jose owned, maintained, and dispatched by Caltrain. SJRRC entered into a TRA with UPRR in exchange for funds to make capital improvements to operate ACE. C H A P T E R 6 Understanding Factors That Influence Different Approaches

Understanding Factors That Influence Different Approaches 49 • Tri-Rail. The State of Florida owns the rail corridor for Tri-Rail, and Florida DOT man- ages the asset. Florida DOT and SFRTA have an operating agreement, in which SFRTA is responsible for maintenance of infrastructure, dispatch, train operations, and maintenance of equipment. • WES. During TriMet’s early planning discussions for the new WES commuter rail line, the freight railroad, P&W, agreed to share track for WES commuter rail if TriMet would agree to contract with P&W to provide maintenance of way, crews for passenger trains, and dispatch functions. Commuter Rail, Responsible Agency Approach to Service Delivery ACE SJRRC • Contracted–bundled for train operations and maintenance of equipment. • TRAs with host railroads (UPRR and PCJPB). COASTER NCTD • Contracted–bundled for all primary functions for NCTD commuter rail COASTER and hybrid rail SPRINTER. Metrolink SCRRA • Contracted–unbundled for train operations, maintenance of equipment, maintenance of track and structures owned by SCRRA member agencies, and maintenance of signals and communications. • Freight railroads (UPRR and BNSF) provide maintenance of way and handle dispatch on railroad-owned lines. • SCRRA is responsible for dispatch on tracks owned by member agencies. Tri-Rail SFRTA • Contracted–unbundled in two contracts for primary functions. One contractor is responsible for train operations and maintenance of equipment (and dispatch and station maintenance). A second contractor is responsible for maintenance of way. • Other contractors provide support functions, such as security and fare enforcement, environmental services, and risk management services. MBTA • Contracted–bundled for all primary functions for MBTA commuter rail. • Amtrak provides maintenance of way for the Northeast Corridor in Rhode Island. Amtrak dispatches all Northeast Corridor service. WES TriMet • Mixed. Agency-operated maintenance of equipment. • Contracted train operations, dispatch, and maintenance of shared track by the short-line freight railroad (P&W). MetroRail Capital Metro • Contracted–bundled for all primary functions for the Capital Metro commuter rail mode. FrontRunner UTA • Fully agency owned and operated as of 2018 when UTA will terminate FrontRunner service on a segment of UPRR-owned and maintained track. VRE NVTC and PRTC • Contracted–unbundled. VRE has separate contracts for train operations and maintenance of equipment with the same private contractor. • VRE leases tracks owned by CSX for the Fredericksburg Line and NS for the Manassas Line, and leases access to Washington Union Station from Amtrak. CSX and NS provide maintenance of way along the respective corridors. GO Transit Metrolinx • Contracted–unbundled. GO Transit has separate contracts for train operations and maintenance of equipment with the same private contractor. For the maintenance of infrastructure, GO Transit has two prime contractors. • The private freight railroads (CN and CP) dispatch all GO Transit trains and maintain the infrastructure on the lines they own. Table 13. Case study commuter rail systems.

50 Contracting Commuter Rail Services, Volume 1: Guidebook • FrontRunner. UPRR owned the right-of-way that paralleled the freight main lines in the FrontRunner corridor. UPRR was not willing to host commuter rail service on shared track but was willing to sell the parallel right-of-way to UTA. UTA purchased the right-of-way and constructed the commuter rail track (most of the distance is single track). Under these circumstances, UTA can use agency personnel to operate and maintain FrontRunner, except on one segment of the corridor from Ogden to Pleasant View. UPRR owns 4.8 miles from Ogden to Pleasant View. The freight railroad maintains this segment of the track and dispatches trains. UTA made a decision to discontinue commuter rail service on the UPRR track in 2018 because of the operating and capital cost required to provide PTC for operation on an active freight railroad. In other cases, the role of the pre-existing intercity passenger rail operator may lead to a negotiated agreement or otherwise define what is reasonable for the commuter rail agency to contract. An example from the Metrolink case study helps to illustrate this point. In 1992, SCRRA decided to contract with Amtrak to operate and maintain the Metrolink commuter rail sys- tem because Amtrak already operated intercity rail service in southern California and owned a facility in Los Angeles to maintain trains. SCRRA later unbundled the original agreement with Amtrak and contracted for Metrolink train operations with other companies. Today SCRRA again contracts (unbundled) with Amtrak for Metrolink train operations. Along the east coast, Amtrak controls operations on the Northeast Corridor, with the excep- tion of the segment between New Rochelle and New Haven, owned by the states of New York and Connecticut and controlled by Metro-North. Several agencies operate commuter rail along a segment of the Northeast Corridor and have agreements with Amtrak. For example, Con- necticut DOT has a purchase-of-service agreement with Amtrak for fully bundled services for SLE east of New Haven, and MTA in Maryland has a fully bundled operations and maintenance agreement with Amtrak for the Penn Line. Massachusetts owns the Northeast Corridor tracks between Boston South Station and the Massachusetts–Rhode Island state line. Commuter Rail Agency Governance In some cases, the commuter rail agency was created to serve limited functions, such as planning, funding, project implementation, and administration. In these cases, a part of the commuter rail agency mission is to contract for the functions of operating and maintaining commuter rail. The following are selected examples from the case studies: • ACE. SJRRC was created in 1995 for the specific purpose of developing and implement- ing commuter rail service in the Stockton to San Jose corridor. Separating administrative (SJRRC) and operational (contracted–bundled) responsibilities was the selected framework that would permit incremental increases in ACE service as ridership increased and funding was available. • VRE. VRE is a transportation partnership of NVTC and PRTC. The two commissions cre- ated VRE to implement and administer commuter rail service and to contract operational functions. In some case studies, the commuter rail mode is part of a multimodal rail transit agency. That transit agency may have an agency policy to contract to a transportation provider for one or all modes. The following are selected examples from the case studies: • MetroRail. Since the initial planning for MetroRail, the Capital Metro objective was to contract the primary functions for commuter rail. Capital Metro has a policy to contract with private contractors to deliver all modes of public transit service.

Understanding Factors That Influence Different Approaches 51 • COASTER. NCTD’s business model is to contract with private contractors to deliver all modes of public transit service. • GO Transit. GO Transit was created to establish and fund, but not to operate, commuter rail service. Agency Rail Capability and Capacity If the commuter rail mode is part of a multimodal rail transit agency with other rail modes (light rail or heavy rail), the transit agency may evaluate directly operating some or all commuter rail functions. The following are selected examples from the case studies: • FrontRunner. UTA owns the right-of-way and the track on which FrontRunner operates and is responsible for maintenance of way. The multimodal transit agency decided to operate FrontRunner with its own staff. UTA also decided early on to use its own staff (from the light- rail vehicle maintenance division) for equipment maintenance for the commuter rail coaches and cab cars. A contractor initially maintained locomotives for FrontRunner. In 2017, UTA assumed responsibility for maintaining locomotives with qualified UTA personnel. • WES. TriMet provides maintenance of equipment for WES commuter rail. TriMet recruited skilled workers from its own existing labor pool of mechanical staff from the bus and light- rail divisions. • MBTA. After acquiring the rail lines and service-related assets used in commuter rail service in 1972 and 1976, MBTA owned almost all rail assets required for commuter rail operation. By 1982, MBTA had already gone through the transition to establish a single operator (B&M) under a single contract. MBTA chose to continue contracting for commuter rail rather than operate directly. The decision was made, in part, on the overall size of the service, the fact that commuter rail was a separate system with its own assets and personnel, and the issues inherent in incorporating another mode into MBTA-operated services (e.g., heavy rail, light rail, bus, and trolleybus). • SMART. The SMART District was established in 2002 to oversee the development and imple- mentation of passenger rail service in Sonoma and Marin counties in California. The dis- trict owns most of the right-of-way in the corridor and operates FRA-compliant DMU rail vehicles. The SMART District Board made a decision for the agency to operate and maintain all commuter rail service with its own employees and hired or trained the required skilled workers with FRA qualifications. Railroad Employee Considerations Case study research showed that some commuter rail agencies considered as a factor the responsibility for the RRTA and RUIA for railroad employees in making the decision to contract for commuter rail functions. The following are selected examples from the case studies: • MBTA. After acquiring the rail lines and service-related assets used in commuter rail service in 1972 and 1976, MBTA chose to contract for commuter rail rather than operate directly. There are several factors that influenced this decision, including – The issue of how to deal with the RRTA and RUIA for 1,000 to 2,000 commuter rail employees while the 5,000 to 6,000 employees of MBTA proper were not railroad employ- ees. In 1977, there was no template for establishing both retirement systems within one organization. This was not attempted until NJ TRANSIT and SEPTA did so in 1981–1983. – MBTA had over 20 unions, although more than 50% of the employees were in one union. The commuter rail employees were represented by 13 rail labor unions and 14 union agree- ments, which could have created an even more complex labor relations situation.

52 Contracting Commuter Rail Services, Volume 1: Guidebook • ACE. One factor in the SJRRC decision to contract for ACE commuter rail in 1998 was a concern about accepting additional responsibilities (RRTA and RUIA) for railroad employees. Other new start commuter rail systems have shown railroad employee considerations can be accommodated with agency operations. Two case study examples document this change in approach: • FrontRunner. Before FrontRunner service was launched in 2008, UTA decided to use its own staff for train operations, dispatch, and maintenance of equipment. UTA recruited experi- enced rail mechanics from its own light-rail maintenance staff and from the outside and subsequently trained a fully FRA-qualified skilled workforce. All UTA employees, even the dedicated FRA-certified mechanics and FRA hours-of- service train engineers, are not subject to the RRTA and RUIA. The engineers for the FrontRunner commuter rail train belong to the same bargaining unit as bus and light-rail operators. • WES. Since the start of service in 2009, TriMet directly provides maintenance of WES rail vehicles. TriMet recruited skilled workers from its own existing labor pool of mechani- cal staff in the bus and light-rail divisions and then trained the mechanics to meet FRA- mandated qualifications. The employees of TriMet, including dedicated FRA-certified equip- ment mechanics, are not subject to the RRTA and RUIA. WES-assigned employees are covered by the same retirement and unemployment plan as all other TriMet employees. TriMet contracts with P&W to operate and dispatch the WES trains. All P&W employees assigned to WES are full-time railroad employees and covered by the RRTA and RUIA. In addition to FrontRunner and WES, Northstar rail vehicles are maintained by Metro Transit, and SMART is a new start commuter rail system entirely operated and maintained by public agency employees. Factors That Influence the Decision to Bundle or Unbundle Based on the review of literature and case study research, the following factors were identified as primary influences on the decisions to bundle or unbundle contracted functions: • Functions provided by the railroad owner or operator • Competitive marketplace for the procurement • Operating environment • Governmental and policy considerations The subsections that follow discuss these factors in further detail. Functions Provided by the Railroad Owner or Operator The first factor that can influence whether to bundle contracted functions is whether those functions are provided by the railroad owner or by the operator. As noted in Table 6, many com- muter rail agencies operate their services on rail facilities that are owned by a railroad company. The following case study examples explain how a commuter rail agency works with the railroad owners or operators and how that can influence whether to bundle contracted functions: • WES. The private railroad (P&W) agreed to share track for WES commuter rail but only if TriMet contracted with P&W to provide maintenance of way, passenger crews, and dis- patch functions. TriMet has a third-party contractor for track reconstruction projects with the approval of private railroad. TriMet decided to provide maintenance of equipment with agency employees.

Understanding Factors That Influence Different Approaches 53 • VRE. VRE commuter rail operates on two freight railroad corridors and leases space from Amtrak at Washington Union Station. The freight railroad owners and Amtrak define what remains for VRE contracted functions. CSX provides maintenance of way for the Fredericksburg Line and the track north of Alexandria except the last mile into Washington Union Station. CSX provides train dispatch for the Fredericksburg Line. NS owns and pro- vides maintenance of way and dispatch for the Manassas Line to Alexandria. Amtrak owns, maintains, and provides train dispatching for Washington Union Station. The remaining functions are train operations and maintenance of equipment, which VRE contracts as unbundled procurements. • GO Transit. During the first three decades of GO Transit service (1967–1997), the Cana- dian Class I railroads, CN and CP, provided all of GO Transit’s primary functions. Since 1997, GO Transit has transitioned to contracts with private companies to provide train operations and maintenance of equipment. The original relationships with CN and CP have influenced the timing and scope of each phase of the transition to unbundled contracted services. As noted in these examples, the owner of the railroad may set requirements for which func- tions the owner will continue to provide as a condition for access to the track, or place restric- tions on what or how the commuter rail agency will provide the related functions of commuter rail. The owner requirements can define what remaining functions are to be contracted and if bundling or unbundling those functions or services is appropriate. Competition When contracting for services, competition among prospective contractors is beneficial. Such competition can drive innovation and cost-efficiency. However, due to the specific operating characteristics of the commuter rail mode, the required skills and qualifications for employees, and the obligations to meet FRA and Transport Canada regulations, the commuter rail industry is not a large marketplace. There are a limited number of contractors with the qualifications and resources to compete for these contracts. The assessment of competition in the marketplace is a primary influence on a local decision to bundle or unbundle contracted commuter rail functions. Case study research showed that some commuter rail agencies evaluated the opportunity to encourage local contractors or small business participation when evaluating decisions about which services to bundle or unbundle in a procurement. The following are selected examples from the case studies: • ACE. SJRRC originally requested proposals for unbundled services for train operations and maintenance of equipment in 1997. One contractor proposed for both services, and one other contractor proposed for maintenance of equipment only. SJRRC made the decision to award one contract for both services. Since that decision, SJRRC has contracted with one contractor, including a negotiated sole source renewal. • Tri-Rail. SFRTA assesses the marketplace prior to any major procurement. For example, in 2007 SFRTA unbundled train operations and maintenance of equipment to increase competition. SFRTA also separated station maintenance at various times to increase opportu- nities for local companies as a prime contractor. As illustrated in the case studies, each commuter rail agency typically makes an assessment to determine if there are multiple, capable contractors available for any or all functions to be contracted. That assessment may vary from time to time (the marketplace changes) and may vary based on any special requirements for the planned procurement. The number of primary contractors may also vary if the contractor is permitted to subcontract functions to another qualified company.

54 Contracting Commuter Rail Services, Volume 1: Guidebook Operating Environment Every decision related to bundling or unbundling contracted services in a procurement is contextual, that is, made in the context of the local operating environment. Local context factors may include contract timing, right-of-way ownership and control, labor agreements, environ- mental considerations, and regional plans. Some case study agencies showed that a decision to bundle or (more likely) to unbundle a service is based on changes within the agency or changes in the commuter rail service, and the timing for when those changes have to be made. The following are selected examples from the case studies: • Metrolink. Originally, SCRRA began Metrolink services in 1992 with a bundled contract with Amtrak to dispatch and operate commuter trains and maintain the infrastructure, signals, and train equipment. Amtrak already operated a major railroad equipment facility in Los Angeles to maintain trains for long-distance and intercity rail service. Within 3 years, SCRRA had opened three additional Metrolink lines. SCRRA was then operating more passenger car revenue miles than Amtrak was in its intercity services. SCRRA began to consider unbundling its services into discrete contracts to no longer rely on a single contractor for the growing Metrolink system. • Tri-Rail. SFRTA’s decisions on contracting are influenced in part by the decisions of other parties and the timing of events. The State of Florida purchased the Tri-Rail corridor from CSX in 1988. CSX remained responsible for maintenance of way and dispatch. Florida DOT and SFRTA entered into an operating agreement, in which SFRTA was responsible for Tri-Rail train operations and maintenance of equipment. In 2014, Florida DOT and CSX transferred responsibility for dispatch and infrastructure maintenance from CSX to the State of Florida, and Florida DOT and SFRTA entered into an operating agreement to transfer dispatch and maintenance of infrastructure to SFRTA. SFRTA was then responsible for contracting the functions formerly handled by CSX. SFRTA made the decision to contract for these commuter rail functions through unbundled procurements. Governmental and Policy Considerations Local context factors may also include governmental and policy considerations, business models, and more. In several case studies, the decision to bundle or unbundle was made in part on a very specific local circumstance that may or may not be transferable to another commuter rail agency. The following are selected examples of these types of decisions from the case studies: • COASTER. In 2015, NCTD made a decision to bundle a contract combining both the con- ventional FRA-compliant COASTER commuter rail and the FRA non-compliant SPRINTER diesel hybrid rail. • MetroRail. Capital Metro owns 162 miles of railroad. The authority decided to separate contracts for commuter rail and freight rail. With that decision made, Capital Metro determined a fully bundled contract for MetroRail was the best way to ensure account- ability for the commuter rail operation. MetroRail operates FRA non-compliant DMU vehicles, and so commuter rail is separated from freight rail according to time of day. For this reason, the commuter rail contractor is responsible for dispatching both freight rail and commuter rail. • FrontRunner. UTA owns most of the FrontRunner corridor and does not operate freight rail on the track. UTA decided to operate FrontRunner with its own staff. By obtaining FRA approval for a one-person qualified crew, UTA can deliver a more cost-effective service than a traditional two-person crew deployed by either a private contract operator or a host railroad operator.

Understanding Factors That Influence Different Approaches 55 Opportunities and Challenges for Each Approach The decision whether to provide commuter rail services by the agency or by contract involves opportunities and challenges. The sections that follow provide additional infor- mation on the opportunities, challenges, and notable practices for each approach to service delivery. Table 14 provides a summary of the opportunities and challenges for each approach to service delivery based on the case study research. These factors may influence the decision to bundle or unbundle commuter rail services. Assessment of the Impact on Performance Each case study in Appendix A includes operating and performance metrics for the case study agency and a comparison to peer commuter rail systems. These data offer limited evidence that the approach to service delivery directly affects the performance metrics, with two exceptions: • FrontRunner cost-efficiency (operating cost per passenger car revenue mile) and cost- effectiveness (operating cost per passenger) in National Transit Database report year 2016 are lower than every peer for the same measures. UTA attributes a portion of its cost-efficient service to its agreement to operate FRA-regulated commuter rail with only one hours-of- service employee per train on agency-owned track (not shared track). • MBTA cost-efficiency and cost-effectiveness measures in 2016 are higher than the average of peers that operate commuter rail services (NJ TRANSIT, Metro-North, and SEPTA) or both operate and contract (Metra). Although MBTA cost metrics were higher than the average of peers in 2016, one peer, Metro-North, reported a higher operating cost per passenger than MBTA. As discussed in Chapter 4, the length of the rail corridor, the operating environment in the service area, the level of service, ownership of the railroad and responsibility for maintenance, and the type of rail equipment all influence performance metrics. Summary Case study research helped to understand the factors that influence a commuter rail agency’s decision for the approach to service delivery. Approaches to service delivery may be agency oper- ated, contracted, or a mix of both. Four key factors that influence this decision are • Ownership or control of the railroad; • Governance of the commuter rail agency; • Agency capability and capacity to perform the primary functions for commuter rail; and • Railroad employee considerations. The following factors were identified as primary influences on the decisions to bundle or unbundle contracted functions: • Functions provided by the railroad owner or operator; • Competitive marketplace for the procurement; • Operating environment; and • Governmental and policy considerations. Every decision related to the approach to service delivery is contextual, that is, made within the context of the local circumstances.

56 Contracting Commuter Rail Services, Volume 1: Guidebook Service Delivery Approach Opportunities Challenges Agency operated • Direct accountability to the customer. • Central services costs shared across all modes. • Seamless customer experience, no transitions in service accountability. • Risk that the addition of a new or additional mode for commuter rail could affect other modes negatively. • Challenges introducing FRA-regulated commuter rail into a transit agency that historically provides bus or light-rail transit. Contracted– bundled • One contractor is accountable for all contracted service functions. • Contract administration is more efficient, offering consistent procedures and more efficient management and oversight. • Opportunity to establish a partnership between the commuter rail agency and contractor with a culture for quality performance. • In a large system, a risk that the scope may be too large for one contractor to manage.a • Greater risk if the contractor fails to perform. • Transition when the contractor changes can be difficult. • Market for competition. Contracted– unbundled • Contractor skills and experience are specific to the function. • Contractors can focus on performance in the area with greatest opportunity to succeed. • Encourages additional opportunities to contract with the commuter rail agency. • Contractors may defer responsibility to another contractor (finger pointing). • Contract administration is more complex, offering less efficient management and oversight. • Partnerships require more effort on the part of the commuter rail agency. Mixed agency operated and contracted • Direct accountability to the customer. • Central services costs shared across all modes. • Commuter rail agency adds contractor expertise where and if needed to mitigate risk. • Risk that the addition of a new or additional mode for commuter rail could affect other modes negatively. • Challenges introducing FRA-regulated commuter rail into a transit agency that historically provides bus or light-rail transit. aLower risk if bundled services include two functions (e.g., train operations and maintenance of equipment) rather than three functions (e.g., adding maintenance of way). Table 14. Opportunities and challenges by approach to service delivery.