Army Installation Rail Operations Implications of Increased Outsourcing Ellen M. Pint, Beth E. Lachman, Jeremy M. Eckhause, Steven Deane-Shinbrot C O R P O R A T I O N For more information on this publication, visit www.rand.org/t/RR2009 Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2017 RAND Corporation R® is a registered trademark. Cover photo of Fort Hood engine courtesy of Beth E. Lachman. Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Preface This document reports the results of a research project entitled Army Rail and Public-Private Partnerships. As part of this project, we compared the Army’s three business models for instal- lation rail operations: government owned, government operated (GOGO); government owned, contractor operated (GOCO); and privatized. We also developed a methodology to compare the costs and risks of the business models to help the Army determine whether it could rely to a greater extent on privatized rail operations. This document describes the results of our analysis, which is based on detailed informa- tion gathered through visits to one installation of each type and data on Army rail require- ments, costs, and performance at installations with deployable units. We estimated potential savings from privatization and determined possible risk factors, such as a decrease in respon- siveness to short-notice deployments, loss of surge capacity, likelihood of accidents or violations of safety and environmental rules, and unexpected cost increases. This research was sponsored by the Deputy Chief of Staff, G-4, and conducted within the RAND Arroyo Center’s Forces and Logistics Program. RAND Arroyo Center, part of the RAND Corporation, is a federally funded research and development center sponsored by the U.S. Army. The Project Unique Identification Code (PUIC) for the project that produced this docu- ment is HQD157609. iii Contents Preface ........................................................................................................... iii Figures ...........................................................................................................vii Tables ............................................................................................................ ix Summary ........................................................................................................ xi Acknowledgments .............................................................................................xv Abbreviations ................................................................................................. xvii CHAPTER ONE Introduction ..................................................................................................... 1 Research Methodology .......................................................................................... 2 Outline of This Report .......................................................................................... 3 CHAPTER TWO Business Models for Army Installation Rail Operations ................................................ 5 Overview and Comparison of Business Models .............................................................. 5 Fort Hood Rail Operations: Government-Owned, Government-Operated Model ..................... 8 Fort Sill Rail Operations: Government-Owned, Contractor-Operated Model .........................12 Fort Benning and Fort Drum Rail Operations: Privatized Model ........................................15 Fort Benning ..................................................................................................16 Fort Drum .....................................................................................................17 Strengths and Weaknesses of the Privatized Model ......................................................18 CHAPTER THREE Cost and Risk Analysis .......................................................................................19 Estimated Cost Differences Between Army Installation Rail Operation Business Models ............................................................................................19 Risks to Army Installation Rail Operations from Changing Business Models ........................ 23 Delayed Rail Movements That Could Affect Army Readiness or Deployment Time Lines ...................................................................................................... 24 Loss of Surge Capacity for Deployments ..................................................................25 Increased Likelihood of Accidents or Violations of Safety and Environmental Rules ............... 27 Unexpected Additional Costs ...............................................................................29 Additional Risks from Increased Privatization ............................................................29 v vi Army Installation Rail Operations Comparing Cost Savings and Risks from Privatization ................................................... 30 Deployment Requirements ..................................................................................32 Sharing Rail Crews ...........................................................................................32 Local Monopoly Concerns ..................................................................................33 Infrastructure Investments ................................................................................. 34 Mitigating Risks from Privatization ......................................................................... 34 CHAPTER FOUR Conclusions .....................................................................................................35 APPENDIXES A. Marine Corps Logistics Base Barstow Yermo Annex Rail Yard Support for Fort Irwin ...............................................................................................37 B. Installation Railroad Contracts and Agreements ....................................................39 Bibliography ....................................................................................................47 Figures 2.1. Key Rail Assets and Operations That Vary by Business Model ............................... 6 2.2. Who Performs the Tasks for Each Phase of Installation Rail Deployment .................. 6 2.3. Map of Rail Lines Between Fort Hood and Port of Beaumont, Texas ...................... 9 2.4. Two Genset Locomotives at Fort Hood, Texas ................................................. 9 2.5. Map of Fort Hood Track (in red) ................................................................11 2.6. Map of the Rail Lines Between Fort Sill and Surrounding Cities ...........................13 2.7. Photo of Fort Sill Track Damage from 2016 Flood ...........................................14 2.8. Map Showing the Approximate Location of the Fort Sill Track Damage and the Portable Loading Area ........................................................15 2.9. Map of the Rail Lines on and near Fort Benning .............................................16 3.1. Cost Comparison of Business Models at Fort Sill .............................................21 3.2. Cost Comparison of Business Models at Fort Hood ..........................................21 3.3. Fiscal Year 2015 Average Monthly Number of Loaded Rail Cars Shipped by Installation .......................................................................... 23 3.4. Installations in the 407th Army Field Support Brigade Region ............................ 26 3.5. Damage from the 2005 Fort Hood Accident ................................................. 27 3.6. Damage from the 2011 Fort Carson Derailment ............................................. 28 3.7. Map of U.S. Army Field Support Brigade Regions and Installations .......................33 A.1. Trucks Being Unloaded at Fort Irwin’s Dust Bowl .......................................... 38 vii Tables 1.1. Army Installations by Rail Business Model ..................................................... 3 2.1. Rail Activity at Target Installations .............................................................. 7 3.1. Effects of Assumptions on Break-Even Point Between Government-Owned, Contractor-Operated Model and Privatization ............................................... 22 3.2. Timeliness of Rail Carriers in Fiscal Year 2015 ................................................25 3.3. Characteristics of Possible Candidates for Privatization ......................................31 3.4. Number of Brigade Combat Teams at Selected Army Installations