Update 2016/8/16: the deal is on, per sources at Amtrak; the cost is $2.5 billion, as reported originally.

Update 9/24: as Alex Block notes in comments, sources at Amtrak deny the story, saying that Schumer spoke too soon, and there are still two bidders and Amtrak has not yet made its choice. If the cost turns out to be $1-1.25 billion rather than $2.5 billion, I will withdraw any and all criticism of the procurement process.

A press release from Senator Charles Schumer’s office is abuzz: Amtrak chose Alstom’s bid for its next order of high-speed trainsets, the Next-Generation Acelas. The press release mentions the size of the contract, $2.5 billion, and the number of jobs it would create, 750; it did not include any information relevant to passengers, such as the number of trains, the expected schedule of delivery, the expected frequency, and the expected travel time. Various media outlets have reprinted Schumer’s press release without such additional information, or indeed any analysis. Let me rectify this and provide some background as to why this order is a fleece.

The order is for 28 trainsets with 425 seats each. This can be seen here and here. Of those 28 sets, 25 should be available for maximum service, well below the 98% peak availability achieved by the TGV, but an improvement over the Acela’s current 16 trains available out of 20. There is no mention of the number of cars, which is how orders are usually priced. However, on page 30 of the technical specs, it is mentioned that the maximum length is 200 meters, equivalent to 8 cars. The capacity is equivalent to about six cars’ worth of seating at the normal seat density of economy-class HSR (including the Amtrak Regional coach), or about seven cars’ worth averaged over all occupied Acela cars. The RFP mentions half a bistro car with an option for a full car (page 21 of instructions to offerors), so eight cars per train is a reasonable assumption. I have seen references to ten cars per set, which I believe come from the option for two additional cars per train (the instructions phrase this as “an extra 33.33% capacity”). From Schumer’s press release it’s difficult to know whether the $2.5 billion figure is the base order or also the option.

Eight cars per train times 28 trains equals 224 cars. $2.5 billion divided by 224 equals $11.2 million per car; if I am wrong and these are ten-car trains, then it is $8.9 million per car. In China, a very high-speed train, capable of 350-380 km/h, costs $4 million per car; this is $900 million at the size of Amtrak’s order. In Europe, the new Eurostar order cost a total of €600-700 million for ten 16-car Velaro trainsets, about $4.7-5.5 million per car in PPP terms (see here and here); the uncertainty comes from euro:pound conversion rates and from the fact that a portion of the order is for refurbishment of the older trainsets. Siemens also sold 8-car Velaros to Deutsche Bahn for $5.2 million per car, again in PPP terms. Japanese trains are even cheaper, about $3 million per car in a recent N700 order, but only last 20 years, whereas European HSR trainsets last 40 and Amtrak specified a 30-year shelf life. The only non-US trainset order that I’ve seen that approaches the $10 million per car mark is the Velaro RUS, which is €600 million for eight 10-car trains, and this includes substantial modifications, such as winterization.

There is no excuse for such high costs. The technical specs are not particularly innovative: on page 22 of the document linked above, it is mentioned that cant deficiency should be 127 mm if the trains don’t tilt and 229 if they do, both of which figures are unimpressive by the respective standards of non-tilting and tilting trains. There is no explicit requirement for tilt. There is a requirement that trains be capable of traveling between New York and Washington in 2:21 (current trip time is 2:48) and between New Haven and Boston in 1:51 (current trip time is about 2 hours, skipping New London, which the specs require trains to stop at); there is no mention of which track upgrades are forthcoming, but given Amtrak’s heavy schedule padding, it is not difficult for a good train to meet the requirements. I do not bring these specs up to attack Amtrak for not demanding more of the trains, but to note that what Amtrak is asking is standard, so there is no reason for trains to be unusually expensive.

I will note that due to Buy America provisions, the trains will be manufactured in the US, at Alstom’s factory in Hornell. This has not caused cost blowouts for the large orders made by the New York subway, the LIRR, and Metro-North, but perhaps this order is small enough that requiring Alstom to build it at a new factory leads to major cost increases. It is also possible that due to difficulties in the bidding process, there are fewer bidders than is normal – Bombardier dropped out of the process last year, and in general, some US contracts have just one bid, with correspondingly elevated prices. But regardless of the reason, Amtrak’s order comes at a factor-of-two cost premium, and Schumer just expressed pride at the few hundred jobs that this waste would create.