Is new ferry a pricey sea-going lemon? And why?

COUPEVILLE — A simmering debate on the design, durability and cost of the Chetzemoka ferry is heating up and may be nearing the boiling point.

State lawmakers are steamed by revelations in an audit last month that the vessel’s final off-the-dock, in-the-water price of $83.6 million in 2010 was nearly $50 million higher than what a Massachusetts ferry operator paid three years earlier for a boat with a comparable design.

They are now pressing state Auditor Troy Kelley to probe deeper into the decisions made and dollars spent on the Chetzemoka, which is pound for pound the most expensive boat ever built by Washington State Ferries.

They’re frustrated that in the rush to fill a void created by the grounding of the Steel Electric-class ferries, the state wound up with a boat that lists when empty, guzzles thousands of gallons of fuel more each year than the boats it replaced and may wear out years sooner than promised because of wear and tear from engine vibrations.

They want to know whether a 20-year-old law requiring the boat be built in Washington state made the project more expensive by limiting competition. At the time, only one shipbuilder in Washington was eligible to bid for the work.

“I think the taxpayers were ripped off in this process,” said Sen. Doug Ericksen, R-Ferndale. “For the past 10 years, the state has not been able to figure out how to build a ferry boat that meets the needs of the state.”

The safety of the boat is not in question as it was with the Steel Electric-class vessel it replaced on the Port Townsend-Coupeville route. There’s no chance lawmakers will ever allow another of these 64-vehicle ferries to be built without a new inquiry into the Chetzemoka.

No one’s more aware of the concerns than David Moseley, assistant secretary of transportation in charge of ferries. But he’s been unable to satisfy critics in countless appearances at legislative hearings and in letters he’s written them individually.

Last week, he capitulated on one count, saying the agency will spend $300,000 to eliminate the listing of the Chetzemoka and its sibling ferries, the Salish and Kennewick.

“These are good boats that will continue to serve the system well for many years to come,” he said. “I am confident they will make it through their life expectancy of 60 years.”

Rush for replacement

Paula Hammond had been Washington’s secretary of transportation only a few months when she ordered four vintage Steel Electric-class ferries pulled from service days before Thanksgiving in 2007.

Her decision followed a Herald investigation into concerns about the safety of the 80-year-old vessels because of extensive pitting and corrosion of the hulls.

Permanently grounding the boats cut off service between Port Townsend and Keystone Harbor and precipitated a crisis that drove the state to hurriedly construct its first new ferry since 1999.

State ferry officials huddled with boat builders, lawmakers, community leaders and former Gov. Chris Gregoire to figure out a way to restore service.

On Dec. 13, 2007, Gregoire said the state would build replacement vessels for the route as swiftly as possible rather than invest millions of dollars trying to make one of the Steel Electrics seaworthy for awhile.

Some riders, lawmakers and maritime workers grumbled that not all the aging vessels were in such disrepair they couldn’t be rehabbed for temporary use.

“I believe the secretary (Hammond) made the right decision to remove those vessels from service. Clearly the hulls were not safe,” Moseley said.

For two months no ferries ran on this arterial of the state’s marine highway system. Limited service was restored when the state rented a 50-car vessel from Pierce County and used the loaner until the Chetzemoka hit the water Nov. 15, 2010.

The Chetzemoka nearly never happened. In early 2008, Washington State Ferries set out to build a boat just like the rented vessel, the Steilacoom II. Only Todd Pacific Shipyards in Seattle sought the job but its bid of $25.9 million was much higher than expected.

The agency rejected it in March that year and within a month Gregoire announced the state would build a 64-vehicle vessel using the design of the Island Home, a larger and heavier car ferry operating between Woods Hole, Mass., and the island of Martha’s Vineyard.

Sticker shock

Eight months later in December 2008 the state awarded a $65.5 million construction contract to Todd and required delivery in 18 months rather than the industry standard of 24 months.

The boat arrived on time. When the last bill was paid, the cost of the construction contract had ballooned to $76.4 million. Add in dollars spent on non-construction items like design, engineering and the propulsion system and the total cost of the Chetzemoka hit $83.6 million, according to the state auditor.

That’s far more than the Steamship Authority of Martha’s Vineyard and Nantucket islands spent on its 76-vehicle Island Home. It awarded a $31.2 million construction contract to a Mississippi boat builder in 2004 and the final tab came in at $34.8 million, according to information provided by the authority to the state auditor.

How construction of two boats using the same basic design differs so much in price is the question lawmakers said has not been adequately answered by ferry officials and only partially explained in the state audit.

Why so costly?

That report issued by former state Auditor Brian Sonntag in early January compared the total costs of the two boats at the time of their construction. Then, they adjusted the figures to 2011 dollars. The gap didn’t narrow much as the price of the Island Home came in at $48.6 million to the Chetzemoka’s $87.3 million.

State and Todd officials say almost all of the gap stems in some way from efforts to get the boat built as quickly as possible.

With the shortened time frame, Todd hired extra workers, ran double shifts and paid gobs of overtime to meet the deadline.

Steel prices were higher. So, too, were hourly wages for laborers. State ferry officials estimated the average hourly shipyard wage in Washington when Todd began work was 39 percent higher than what the Mississippi firm paid those who built the Island Home.

Washington State Ferries made multiple and significant modifications to the boat’s design, driving up costs further. With the compressed schedule, construction work actually began before all the revisions were finished.

“We took the design and built what the ferry system wanted,” said Fred Kiga, senior vice president of government affairs for Vigor Industrial, which acquired Todd in December 2010.

In all, there were 29 change orders totaling $10.9 million, according to the audit. Roughly $6.5 million could be traced directly to labor and materials to keep on track, auditors found.

Today, if you put the Chetzemoka and Island Home side by side, you could see a few of the major physical differences.

For example, Washington’s boat is 20 feet longer to accommodate larger fuel and sewage tanks.

Another visible variation involves the loading of vehicles. The Island Home can hold 60 vehicles on its main deck and 16 more on a deck that can be raised before sailing then lowered for offloading and loading. The Chetzemoka does not have such a hoistable deck. Without it and with the added length, it can carry more big rigs than the Island Home which had been a goal of the state.

Build here

Politics also elevated the price. Existing laws require ferries be built in Washington state by shipyards with state-approved apprenticeship programs. This seriously crimps competition that can lead to lower-priced contracts, the audit found.

Lawmakers approved the Build in Washington law in 1993 amid a broader debate on building the 202-vehicle Jumbo Mark II class of ferries.

Pat McClain was executive director of a maritime trade association that teamed with labor unions and environmentalists to push it through.

“There was popular sentiment behind it,” recalled McClain, now governmental affairs director for the city of Everett. “We made the argument that they’re our ferries, our waters, our customers so can we keep it in Washington state to keep our jobs.”

Opponents argued a bundle of tax dollars could be saved by getting bids from out-of-state. Supporters countered that meant sending tax dollars elsewhere rather than keeping them in Washington.

While the recent state audit concluded the limit on competition could add millions of dollars to a project, it also tried to quantify the economic benefits of such a policy. It estimated $150 million in spending on ferry construction — a little more than what was spent for the Salish and Kennewick combined — would support 322 jobs directly and another 1,355 jobs in other sectors of the economy.

With the Chetzemoka, there was no competition because in 2008 only Todd Pacific Shipyards was qualified to bid for the work. And when the state sought bids to build the Salish and Kennewick, again only Todd was eligible.

Neither the auditor nor state ferry officials would hazard a guess on what this meant to the bottom line of the contract. Ferry leaders note the Salish and Kennewick each cost less to build because of lessons learned from the Chetzemoka enabled savings on labor, materials and design.

And they boast of building the three ferries in what is called the Kwa-di Tabil class under budget. Overall, the state penciled in $213.2 million for all thee and ended up spending $206.3 million.

With the experience of the Chetzemoka fresh in mind, a co-chairman of the Senate Transportation Committee said he may try to revise or repeal the rule.

“I think we should open it up and get outside bids,” Sen. Curtis King, R-Yakima, said. “If we pay 40 percent more than we should, tell me how that’s fair. Tell me how that makes good sense to citizens of Washington.”

Worries for future

The amount of tax dollars spent on the Chetzemoka is not the only issue irritating legislators.

They are worried that some of the changes are going to make it more costly to operate and maintain in the future. A few doubt the Chetzemoka will reach its projected 60-year life running under the constant strain and vibration from a propulsion system originally intended for a larger ferry.

They remain perplexed that the boat was built with a lean when empty of vehicles and level when loaded. The Island Home is the same way.

The lean is caused by the grouping of stairwells, an elevator and exhaust pipes on the port side. Moseley said last week a “simple fix” will be undertaken to add weight on the opposite side so the boat sits level in the water when unloaded.

And lawmakers are frustrated all three of the 64-car boats burn more gallons of fuel per hour than the Steel Electrics.

The ferries in the Kwa-di Tabil class use more biodiesel because they are heavier and faster than the Steel Electrics, state ferry officials said.

The mothballed vessels used about 56 gallons per hour compared to 66 gallons per hour for the Chetzemoka. The Salish and Kennewick, which have different propeller systems, consume 89 and 98 gallons per hour respectively, according to the state. By comparison, the Island Home burns up about 128 gallons of diesel per hour, according to the state.

Hour by hour it adds up. Last year, between July and December, fuel use by the Chetzemoka (192,000), Kennewick (175,300) and Salish (261,500) totaled 628,800 gallons. Each runs on a B5 blend of biodiesel meaning 5 percent of the mixture is biofuel. The state could not immediately provide a breakdown of how much more fuel these boats are using than the Steel Electrics would have during the same time.

Design oversight

Rep. Larry Seaquist, D-Gig Harbor, is one of the most outspoken critics of the Washington State Ferries actions regarding the Chetzemoka. He’s often said hurried decision-making early on and overdesigning later by ferry staff resulted in a vessel “functioning in a very problematic way.”

As a sign of his frustration, last week he introduced a bill to make sure no new boat is built without legislative approval of the design.

Rep. Norma Smith, R-Clinton, is equally frustrated. She said she’s still seeking satisfactory answers to how the many design changes will affect the life of the Chetzemoka. That’s why she penned a letter signed by 15 lawmakers calling on Kelley’s office to conduct another audit.

“We started with one boat and we did such significant modifications it was no longer the Island Home at the end of the day,” she said. “Had the modifications been pursued in a different manner would we have a different outcome? I don’t have the expertise to give you that answer.

“I am certainly frustrated with the leadership of Washington State Ferris,” she said. “When the department brings you a plan to respond to a crisis, we have to trust they will give you accurate information.”

Rep. Judy Clibborn, D-Mercer Island, the chairwoman of the House Transportation Committee, doesn’t share her colleagues’ concerns.

“There are things that they have focused on about these little ferries that I don’t know why they have focused on them,” Clibborn said. “You’re not going back and rebuild them. They’re ours.

“They had to be built. There was no service. People in those communities were screaming for service.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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