UNION PACIFIC RAILROAD COMPANY

DENNIS J. DUFFY                                                                                                                                                                         Room 1206
Executive Vice President Operations                                                                                                                                              1416 Dodge Street
                                                                                                                                                                                             Omaha, Nebraska 68179
                                                                                                                                                                                                  

November 11, 2002

To: Operating General Chairmen

From: Dennis Duffy

RE: System implementation of Field Training Exercise
Program (FTX)

As many of you are aware, during the last year the Utah Service Unit piloted a new approach to administering efficiency tests.

The new approach is known as "FTX", which stands for "Field Training Exercise". It is based on promoting education and understanding of rules through a process of discussion between managers and the employee(s) involved in an efficiency test.

Many of you have commented favorably about FTX and have asked that it be expanded to the rest of the system. This letter is to inform you that the decision has been made to implement the program on the rest of the system effective January 1, 2003.

Enclosed is a copy of "FTX Guidelines", setting forth the details of the program. Between now and January 1, these guidelines will be distributed to the Regions for their use in preparing to implement the program.

I believe FTX is another example of what we can do together to improve our culture and make Union Pacific the safest railroad in the country. I hope you will support this effort by communicating the program to your local chairmen between now and January 1. Of course there will also be company communications to the employees between now and then.

FTX Questions and Answers
                                                                  
UPRR FTX Guidelines                                                          11/08/02

Over the past year, the Utah Service Unit has piloted a new approach in the way Efficiency Testing results are handled. This new approach, called 'Field Training Exercise Program' (FTX), utilizes a practice called 'debriefing' for promoting compliance with UPRR rules, policies, and instructions, and for handling instances of substandard performance. Debriefing involves discussion between the testing manager(s) and the tested employee(s) and promotes education and understanding in lieu of the current practice of invoking disciplinary action for a test failure. Because of the success of this pilot, FTX will now be expanded to other service units. Following is a summary of the FTX process.

Notification of testing results
•      Employees will be informed of their performance after all tests and observations, regardless of whether performance
        is within or outside of acceptable standards. For tests involving routine observations, crews will be informed of their   
        performance by the most expedient method, when practicable. This may include direct follow-up discussion or 
        subsequent contact/notification by the manager. For Structured Simulations (Set-up tests), crews will be debriefed at
        the scene.

Performance below standard
•      If, within any 24-month period, an employee has a second failure of a testing event involving rules associated with 
        UPGRADE levels 1-3. the employee will be required to participate in a Formal Debriefing to discuss the employee's
        performance. In the event of a third such failure within a 24-month period, the employee will receive a second Formal
        Debriefing and will thereafter be ineligible for debriefing for a minimum period of 24 months from the date of the most
        recent event. Exception: If, within a 24 month period, a second testing event failure involves the same operating or
        safety rule as a previous failure , or a second cardinal rule, the employee will participate in a Formal Debriefing and
        will thereafter be ineligible for debriefing for a minimum period of 24 months from the date of the most recent event

•      For UPGRADE Level 4 and all FRA engineer decertification events, a Formal Debriefing will be held as soon after
        the event as practicable. In the event of a second such failure within a 24 month period, the employee will be subject
        to handling under the UPRR Discipline Policy and not eligible for further debriefing for a minimum period of 24
        months from the date of the most recent event.

•      Any combination of three failures within a 24-month period, regardless of level, will result in ineligibility from FTX for
        a period of 24 months following the date of the most recent failure.

•      Handling of certain rules infractions (I.e. decertifiable event), as dictated by Federal Regulations, remains unchanged.

•      If the employee becomes ineligible from participating in the FTX process due to test failure(s), any subsequent test
        failures during the period of ineligibility will be handled according to the existing disciplinary process. The employee
        may regain eligibility to the FTX process if he/she works failure free for 24-months following the date of the most
        recent failure.

Debriefing
•      Discussion involving the employee(s) tested and the testing manager(s). The debriefing will take place after the test is
        completed at the location, or in close proximity to the location of the test.

•      The intent of the field debriefing is to review the rule(s) tested, the intent and application of the rule(s), and the
        employee(s) performance relative to the testing event.

•      All debriefings will utilize a debriefing checklist and affected employees will receive a copy of the checklist at the
        completion of the debriefing.

Formal Debriefing
•      Discussion involving the employee and the employee's supervising manager. The employee's local labor  
        representative will also be invited to attend. The formal debriefing will be conducted at a suitable location allowing for
        privacy and open discussion as soon as practicable after the day of the failure.

•      The formal debriefing is not a fault-finding exercise. It is intended to be an open discussion and will focus on root
        causes and corrective action needed to avoid future failures.

             * If an employee declines to participate in a debriefing, the failure will be handled through the disciplinary process.

FTX Implementation
•      During the introductory period, local chairmen are encouraged to accompany managers on tests. If a situation arises
       in which an employee is subject to a disciplinary hearing, local chairmen will not be called as witnesses in any hearing.