State spends millions more than others on ferries
Courtesy of Washington State Ferries / Vigor Indus
Todd Shipyards, which is now owned by Vigor Industrial, built the six newest ferries for the state and is building two more, including the Tokitae, above.
Courtesy of Washington State Ferries / Vigor Indus
Work on the hull of the state's newest ferry, the Tokitae, continues at the shipyard of Vigor Industrial in Seattle. The 144-car vessel is scheduled to be put in service in spring 2014.
The state paid $79.7 million for the 64-car vessel compared to the $43.4 million it cost to construct the 76-car Island Home, which serves the islands of Martha Vineyard and Nantucket, according to an audit released this month. Those figures are in 2011 dollars.
And it's not an aberration.
Washington State Ferries has spent millions of dollars more on its six newest ferries in part because of a state law that requires the vessels be built by a Washington company, the audit concluded.
Auditors said the law limits competition and pushes up costs. Todd Shipyards, which is now owned by Vigor Industrial, built the past six ferries for the state and is building two more now.
They recommend rewriting the law to allow 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 agency assert tighter control of the terms and prices in construction contracts in order to save money.
Lawmakers now will try to figure out what to do to control construction costs and some want another investigation done to help make sure any changes they make are meaningful.
Today, a legislative panel will hold a public hearing on the audit and its recommendations.
"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 Joint Legislative Audit and Review Committee will conduct the hearing at noon. Thirteen representatives and senators serve on the panel including Sen. Nick Harper, D-Everett, and Rep. Derek Stanford, D-Bothell.
The 78-page report, which cost $1.15 million and took roughly a year to complete, confirms lawmakers' belief the state paid a higher price for the newest boats in the fleet. The audit did not detail construction spending on every new ferry built in recent years.
It 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 $7.5 million and $42.2 million more per ferry when compared with comparable vessels, after accounting for design differences.
In the case of the 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 route in November 2007.
But, the audit found, the final shipyard contract of the Chetzemoka, in 2011 dollars, was $79.7 million compared to $43.4 million for 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.
The report also looked at how well the state agency follows 15 leading practices for design and construction of ferries.
Auditors concluded agency staff effectively use eight, can improve their use of five, and have failed, so far, to use two. They said money could be saved by making sure the agency has a completed design and a set price before construction begins, which was not the case in recently built boats.
While lawmakers welcomed the review, several felt auditors didn't go far enough in identifying the causes of higher prices. Fifteen lawmakers united this week to ask state Auditor Troy Kelley to follow up on the full cost of designing, building, operating and maintaining each of the 64-car ferries.
State Rep. Larry Seaquist, D-Gig Harbor, said the problem with the latest audit is it ignored what he considers a major problem: State ferry employees overdesign vessels, which drives up the cost to build, operate and maintain them.
"I think from end to end this is a defective audit," Seaquist said when the audit came out earlier this month. "Very little in it addresses the problems that precipitated the audit."
Former Auditor Brian Sonntag defended the final product.
"I'm sorry he doesn't like it. It's a good report. There's some valuable information in there," he said.
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."
Jerry Cornfield: 360-352-8623; firstname.lastname@example.org.