Staff summary of cost changes from GAO report to Senator Byrd

1 This was developed by the GAO by studying past contracts and determining and applying appropriate contingency factors by type of contract.

2 The report notes costs from route realignment as follows:

Undetermined further increases for right-of-way and bridge costs since I-95 is cancelled in Maryland.

**Undetermined increase due to uncertainty over I-66 land rights and construction. (Minimum daily inflation delay is $37,500/day.)

3 Based on GAO comparison of WMATA rates with other estimates. Contracts let at more than estimates.

5 Obtained by rising design estimates for fiscal year 1976 program.

TABLE IV.-OPERATING DEFICITS, POSSIBLE INCREASES FROM METRO PROJECTIONS

1 Neither of these items has yet been approved by UMTA. In testimony before this committee on Nov. 5, 1975, General Graham admitted that these funds may not be available.

2 Given that 85 percent of system operating costs are labor and fuel, a 10 percent underestimation in these volatile commodities is not unlikely. Also the rail costs, with no past experience as a basis for forecasting, are even more vulnerable to fluctuation. The 10 percent allowance also parallels BART's early experience.

3 The Congressional Budget Office noted in the "1976 Budget: Alternatives and Analyses" that a 15 percent variation in system revenue was likely based on their analysis of population trends.

Note: This amount is not the maximum deficit conceivable. Fares could be lower, risership lower, or cost higher. Further, no attempt is made to allow for interactions between costs.

November 18, 1975 Request

Page 1

4.

Questions through 4 deal with cost estimates by contract.

This information is currently being developed in line with the new
GAO reporting system, the so called Defense Selected Acquisition
Report (SAR). The report will be completed in January and will

be forwarded to the Committee at that time.

62-418 76 - Pt. 2 - 2

022076

QUESTION 1

For each contract in the FY 76, 77 and 78 program, would you provide us

the original estimate (February 1969), the Adopted Program Estimate (November 1974), and the most current estimate and the date of the estimate.

ANSWER

Detail sheets by Fiscal Year are attached.