STATUS OF PEPCO AGREEMENT

RATE NEGOTIATIONS:

Mr. Dodge and Mr. Garrett reported on the status of negotiations with PEPCO from 1970 to date, concerning Authority electrical needs for Phase I Metro operations and the impasse which had developed as to agreement on voltage regulation, cash advances and rate schedule.

Lengthy discussions were held wherein it was agreed that the matter would be referred to the Public Service Commission but that negotiating efforts would continue with PEPCO to try to reach an agreement. It was also agreed that the Chairman would issue a release stating that the matter would be scheduled for discussion in open session at a subsequent date.

OPERATING AND CAPITAL FUND REQUIPEMENTS FROM LOCAL JURISDICTIONS
BY PAYMENT YEAR WITH ANNUAL FARE INCREASES

November 24, 1975 Request

Question 8:

General Questions

operational in 1982.
Please submit a range of estimates as to the amount of subsidies required
from local governments, assuming the currently proposed fare structure is

Operating subsidy requirements are included in the following

Alexandria

1/ Includes debt-service requirements and is net of Section 5 finds.

GENERAL QUESTIONS

Question 9. Please submit the Senate study regarding use of Dulles access road for Metro.

Answer. The "Dulles Airport Rapid Transit Service" study of July 1971 is attached. (Submitted for the committee's files, report by Department of Transportation.)

Question 10. Please submit the percentage of the bus fleet immobile daily along with comparable data from other transit authorities.

Question 11. Please submit the average length of immobilization for buses and the average (mean) time between immobilization periods along with comparable data from other transit authorities.

Answer. WMATA-Information not available'; New York City Transit Authority-Information not available; Chicago Transit Authority-Information not available; Cleveland Transit Authority-Information not available; and Philadelphia Transit Authority-Information not available.

QUESTIONS ON THE BUDGET

Question 1. In their July report GAO found that the Authority underestimated their program for 1976 by $312 million. Please provide estimates of the FY 76 and FY 77 programs reconciling this amount.

You may recall that the study of the FY 1976 program was initiated because neither the Administration nor Congress had acted upon the $4,454 million financial plan and WMATA was facing a $211 million shortfall in FY 76 funding. In May 1975 we advised Congressman Diggs that our total funding need was $734 million, which included several unfunded FY 75 contracts which, because of rising escalation costs, had to be carried over.

GAO's statement, "We concluded the cost estimate for projects planned in Fiscal Year 1976 was understated by $312.9 million . . .", is very misleading. The Comptroller General's letter to Congressman Mazzoli on this subject clearly. shows the following:

When WMATA was first presented GAO's findings we pointed out a number of errors of fact. These errors of fact included:

1 WMATA is now working on a system of reporting which will provide this information on a regular basis.

1. Miscalculations of design estimates by GAO.

2. Incorrect Section Designer estimates for structural and stage contracts. 3. Failure to account for inclusion of betterments, add-ons and handicapped facilities in the Section Designer estimates, all of which are funded 100% from other sources, and

4. Failure to recognize $28.5 million in contingencies which were included in the $734.2 million.

At that meeting it was agreed that the staffs of WMATA and GAO would work together to resolve the errors of fact to their mutual satisfaction. Substantial progress was made when GAO suddenly ceased and reverted to their previous position. We feel that, had GAO corrected their errors of fact, the letter to Congressman Mazzoli would have read as follows:

1 Includes betterments, add-ons and handicapped facilities.
Contingencies listed in administration by GÃO, distributed to offset increases in estimates.

1 Includes betterments, add-ons and handicapped facilities.
* Contingencies listed in administration by GAO, distributed to offset increases in estimates.

163, 455

Question 1. In their July Report, GAO found that the Authority underestimated their program for 1976 by $312.9 million. Please provide estimates of the Fiscal Year 1976 and Fiscal Year 1977 programs reconciling their amount. Answer. The $312.9 million referred to in your question represents the difference between the WMATA estimates for the Fiscal Year 1976 program submitted in May 1975 and the total GAO unadjusted amounts for the Fiscal Year 1975 carryover program, the Fiscal Year 1976 program and start up costs. Table 1 summarizes the difference. Detail sheets supporting Table 1 are attached.

You may recall that the study of the Fiscal Year 1976 program was initiated because neither the Administration nor Congress had acted upon the $4453.7 million financial plan and WMATA was facing a $211 million shortfall in FY 76 funding. In May 1975 we advised Congressman Diggs that our total funding need was $734 million, which included several unfunded FY 75 contracts which, because of rising escalation costs had to be carried over.

If the GAO had followed the intent and main objective of the report vis-a-vis a funding need of approximately $734 million for work rather than conveying the impression that we had underestimated the work, the summary table would have appeared as follows:

Table II shows a difference of $163,651 which represents the difference between GAO unadjusted figures and our programmed estimate, a difference that has never been accepted by the Authority.

When WMATA was first presented GAO findings, a number of differences of opinion arose between our staff and the GAO. The principal differences included:

(1) Miscalculation of design estimates by GAO.

(2) Use of latest Section Designer estimates taken at face value which in many cases included amounts for betterments, jurisdictional add-ons and handicapped facilities, all of which are funded by other sources. Also, many of these estimates have proven to be overstated as evidenced by recent bids opened by the Authority. At that meeting it was agreed that the staffs of WMATA and GAO would work together to mutually resolve the major differences.

During the period of negotiations between WMATA staff and GAO, the deadline to report back to your committee became critical and none of the differences were resolved when the letter from GAO to Congressman Mazzoli was forwarded. At a subsequent hearing on November 18, 1975 before your committee, several of the differences of opinion mainly the approval for calculating design estimates had been resolved. The major difference of opinion which is still not resolved is the use of unadjusted Section Designer estimates, and we are currently at a standstill with GAO concerning this matter.

The "Current Amount" Column in the attached detail sheet reflects the latest updated estimates and bids received thru January. Since the Mazzoli letter, bids have been taken for Contracts 1B0066, 1G0031, 1F3012, 1F3011, 1G0011, 1G0021, and 1L0011. Cumulatively these bids are $35.4 million under the section designer estimates contained in the letter to Congressman Mazzoli.