(The following article by Cathy Woodruff was posted on the Albany Times-Union website on February 16.)
ALBANY, N.Y. — The state Department of Transportation should refuse to pay at least $1.4 million in questionable expenses by Super Steel Schenectady for work on a fleet of high-speed trains now idled in a legal dispute with Amtrak, according to an audit released Tuesday by the state comptroller’s office.
In their examination of transactions between the state and Super Steel Schenectady, which was tapped in 1998 to rebuild seven Rohr Turboliner trains built during the 1970s, auditors cited an array of accounting and financial oversight lapses by DOT and recommended changes in the department’s accounting and auditing processes.
The audit, which follows a series of audits released in June 2003 by state Comptroller Alan Hevesi, is the latest revelation concerning Gov. George Pataki’s $185 million plan to put high-speed trains on line between New York City and this region.
The project was to shave 20 minutes from the two-hour, 20-minute trip using rebuilt trains, but it has been fraught with cost overruns and delays.
Last August, state Transportation Commissioner Joseph Boardman filed a federal lawsuit against Amtrak, accusing the railroad of failing to deliver on its part of the rail agreement. Amtrak, which has moved the first three trains completed to a storage facility in Delaware, contends the contract was built on a foundation of false assumptions and should be declared dead.
Super Steel Schenectady in Glenville and its parent company in Wisconsin did not respond to requests for comment Tuesday. DOT issued a stop-work order on the remaining trains last fall, and agency spokeswoman Jennifer K. Post said officials are awaiting the outcome of the litigation with Amtrak before deciding whether to move forward with reconstruction of the remaining trains.
While the original contract with Super Steel called for $21.4 million to rebuild seven trains, later amendments increased the expected cost to $74.4 million. The cost of the first two trains alone, which are among three now in Amtrak’s possession, was about $34 million, according to the auditors’ estimates.
At the time that work on the remaining trains stopped, another proposed change to the contract would have reduced the number of trains to be rebuilt to five. Coach cars from trains 6 and 7 would have been rehabbed for use in expanding capacity of the other Turboliners.
Meanwhile, the comptroller’s office put the full cost of completing the project, even with those revisions, at more than $90 million, including new costs for engineering consultants, turbines and rebuilt transmissions.
Hevesi’s auditors focused their examination on payments made between July 1, 2002, and Jan. 1, 2004, and found the greatest fault with a $6.77 million chunk of payments that were part of a plan for Super Steel to “close out” the project.
That is where auditors found the $1.4 million in costs that they said should be rejected because of data entry errors, calculation mistakes and other problems.
In a written response sent by DOT to the comptroller’s office in December, chief engineer Paul T. Wells said: “The department did not and will not pay for any of the items disallowed by your audit. . . . Since many of these costs were estimates, it is reasonable to expect that they may change.”
Post said that part of the audit was based on the proposal to alter terms of the Super Steel contract, which was not implemented. “There was no way to substantiate costs that had not been billed and had not been incurred,” she said.
Elsewhere in their audit, the comptroller’s analysts pointed to $1.6 million in payments that they said DOT approved for Super Steel without sufficient verification.
DOT’s Wells, in his response, said DOT did review the requests, as recommended by the auditors, and determined that $197,537 of the payments should not have been allowed.
He said DOT will deduct the amount from future payments.