The Washington State Auditor’s Office has released a report that examines the practices used to build new ferries for the state, including the requirement that state ferries be built in Washington and by shipyards with approved apprenticeship programs.
The Auditor’s Office was advised by a panel of five national maritime industry experts who collected information on 39 ferries built in the U.S. by eight ferry operators, including WSF, during the past 20 years.
The report, “Washington State Ferries: Vessel Construction Costs,” concludes, “It does cost more to construct a ferry when WSF is the purchaser compared to other ferry purchasers, and that certain regulatory requirements – the Build in Washington laws and the Apprenticeship Act – contribute to these higher costs.”
The report also examines WSF’s use of leading practices to develop, manage and monitor its ferry construction contracts and concludes that, “While WSF has improved its use of leading practices, we believe there is potential for further reductions in construction costs through the use of additional leading practices.”
After considering all the data, the panel recommended that the State Legislature address the regulatory barriers that limit competition on WSF vessel procurements by:
• Allowing WSF to use alternative strategies to encourage competition for its ferry procurements when insufficient interest exists or higher-than-expected bids are received from Washington shipyards. One possible strategy would be to allow WSF to invite out-of-state shipyards to bid on new vessel construction contracts in these instances.
• Undertaking a study of the Apprenticeship Act to identify and resolve potential barriers for prospective applicants, in particular shipyards with established apprenticeship training programs.
The panel also identified four leading practices as having the greatest potential for cost savings: Fully adhering to fixed price contracts for ship design and construction, waiting to start vessel construction until after the design is complete and approved, using an independent owner’s representative, and shifting all responsibility for project delivery and quality to the shipyard.
Fred Kiga, senior vice president of government affairs for Vigor Industrial, which recently delivered three 64-car ferries and is building two 144-car ferries for WSF, said, “It is the legislature’s prerogative to have a build-in-Washington program, and I think they have taken into account not only the economic impacts of the build-in-Washington program, but also their desire to have a strong and vibrant maritime industrial cluster.”