Based on my experience managing government contracts, there are a few things to consider about "outsourcing" or "privatizing." There are two kinds of "privatization." In the first, Amtrak or other passenger rail service is financed entirely by private capital and run without any sort of government subsidy. That's what Brightline/Virgin and Texas Central are trying to do. That's also the way passenger rail was operated in the US before May 1, 1971. It was a total abject failure in the old days, which is why Amtrak was created. It's still an open question as to whether Brightline/Virign and Texas Central will succeed or fail and be swept up into Amtrak.
The other kind of privatization should better be called "outsourcing." I saw oodles of this during my government career. That's when the government decides to use their tax dollar to contract out a function rather than operate it themselves. The first one I saw were for janitorial services at government building. It sort of makes sense in that context. The U.S. Geological Survey, for example, does not specialize in janitorial services, so why have to deal with the details of managing such services? It also saves money in that case, because the outsourced cleaners are not government employees, and are thus compensated less. However, outsourcing is not necessarily a cheaper way to do things. You not only have the actual cost for the service, you have the government agency's overhead,AND you have the contractor's overhead, AND the contractor is, of course, entitled to some profit on the job.
The other advantage of outsourcing is if the agency only needs the service intermittently, of course, hiring an outside contractor makes sense. At the USGS, we would sometimes need to install observation wells, collect core samples, etc. But maybe we'd only need to do it once a year or so. There are lots of water-well drillers and geotechnical firms that can provide off-the-shelf services that end up being cheaper than our office having to maintain and operate a drill rig. On the other hand, if we were to have enough work to keep the drill rig in more or less constant operation, it would probably be cheaper for our agency to do it in-house.
At EPA, there's a National Vehicle Emissions Lab in Ann Arbor. It's owned by EPA, but it's operated by contractors. Thus, when we needed to have them help us with doing various field emissions testing we were doing for our program at headquarters, we would have been forced to go through the full government contracting process. That was if they could do what we wanted, which they couldn't, as they supported other kinds of things. So we ended up using a different contractor. Believe me, for what they charged, we could have done the work a lot cheaper if we had in-house laboratory and shop capability. But with government agencies, the politics is such that there are personnel ceilings, and the only way to get the work done is to hire a contractor. Thus, the number of "government employees" is limited, but all those people working for the contractor are really doing government work. And it's not cheap. On my last contract, we were paying $100/hr for engineering techs. Of course, those engineering techs weren't being paid $100/hr, and if done in house, they'd be GS-7s to GS-9s and probably making more like $20 - $30/hr.
What this means for passenger rail is this: Passenger rail is a vital service that's inherently non-profitable, and our political leaders have decided that it's worth supporting with taxpayer dollars. Because of that support, whether the actual service is run by a government agency ("Ministry of Railroads?"), a government owned, independently managed corporation (Amtrak), or contracted out to private companies, in no sense can that service be considered "privatized." Some think that contracting out the service will result in economies and improvements, but it's not clear that's the case. These contractors have no "
skin in the game," as they say, and will tend to do little more than meet the minimum terms of the contract as cheaply as possible. Thus, any such arrangement will require an army of government paper pushers who are vitally necessary to keep the contractors in line. If Amtrak is retained as a vehicle to pass the money on to the contractors who run the service, then not only will Amtrak need an army of paper pushers to keep an eye on the contractors, but the DOT will need to keep an army of paper pushers to keep an eye on Amtrak. I cannot see how such a system can cost less money or provide better service than the current arrangement.
It must pay for them - plus make a profit! Give Amtrak a subsidy!
