State looks into cost of building ferries. Cheaper to build out of state?

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EVERETT — State lawmakers may reconsider the law that requires new ferries to be built in Washington in light of an audit suggesting that they could be built cheaper at shipyards out of state.

The $1.2 million audit is the subject of a hearing Wednesday in Olympia before the Joint Legislative Audit and Review Committee, which has 13 representatives and senators.

The 78-page report that took a year to complete did not detail construction spending on every new ferry built in recent years, but it shows the state paid higher prices on the six newest vessels in the fleet, The (Everett) Daily Herald reported Wednesday ( ).

The state paid $80 million for the 64-car Chetzemoka compared with the $43 million it cost to construct the similar 76-car Island Home, which serves the islands of Martha Vineyard and Nantucket in Massachusetts.

The Chetzemoka began on the Port Townsend-Coupeville route but moved to the Point Defiance-Tahlequah route in January 2011.

The law that requires state ferries be built by a Washington company limits competition and pushes up costs, the audit concluded.

Todd Shipyards, now owned by Vigor Industrial, built the past six ferries for the state and is building two more now.

Auditors recommend allowing out-of-state shipyards to at least bid on new vessel construction contracts, if bids from in-state firms are insufficient or higher than expected.

They also suggest the state assert tighter control of the terms and prices in construction contracts.

“They cumulatively make some choices that make the ferries more expensive than other places,” said Larisa Benson, director of performance audits for the state.

The audit examined construction costs of the three newest vessels, the 64-car ferries in the Kwa-di Tabil class, and the three Jumbo Mark II boats built in the 1990s, which carry 202 cars each.

On four of those boats, the auditors found the state shelled out between $8 million and $42 million more per ferry when compared with comparable vessels, after accounting for design differences.

In the case of the MV Chetzemoka, Washington State Ferries used the Island Home design as a starting point.

They acquired the blueprint in 2008 in hopes of saving money and expediting construction of a replacement vessel for an aging Steel Electrics yanked from service on the Port Townsend-Coupeville route in November 2007.

But, the audit found, the final shipyard contract for the Chetzemoka, in 2011 dollars, was $37 million more than the Island Home.

Among the causes: several “substantial changes to the design” to meet state and federal regulations, a single bid that came in millions of dollars higher than expected, and $10 million in change orders of which roughly $6.5 million was spent to expedite the construction schedule, according to the audit.

While the price of the Chetzemoka came in high, the combined construction tab for the subsequent two 64-car vessels — the Salish and Kennewick — came in below budget, said

David Moseley, assistant secretary of transportation in charge of ferries.
Moseley took issue with some elements of the analysis.

But he said he was “pleased they found we are incorporating most of the best practices. The audit does not say Washington State Ferries overdesigns the vessel. That is not the conclusion of the audit.”

Last modified: January 23. 2013 11:18AM
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