Lawmakers looking at cost of state ferries
EVERETT, Wash. (AP) - 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 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 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 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 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."
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 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 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 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 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."
Reduce competition and prices rise. Now there is a big surprise. Democrats must go through life with constant expressions of shock on their faces as their silly schemes blow up in their faces.
Man this State sucks sometimes. Â Yes, you can also get cheap clothes made in China. Â So basically the State lawmakers are considering using cheap labor in States that don't protect their workers or require fair wages? Is that how it goes? Then they should shut up their whining about Boeing taking jobs to the South, where there are no real wage protections or fairness in their hiring. Â Â Unreal... Â Real job creators, aren't they? Â FAIL.Â
So allowing purchase of goods or services across State lines actually reduces the cost of said goods or services?
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Perhaps that is something we will find in the ACA, no?
Well then, maybe we should have tried that first but oh well. Forward to failure!
Work towards better efficiencies, but outsourcing our own jobs is lunacy.
Washington is essentially run by the labor unions and their puppets. What's worse is the people keep voting for these idiots. What a stupid law. Is anyone really surprised?Â
 @MajorSkeptic I really hate the war on the Unions.  Corporate profits are up 171% since the President took office.  And American wages are down.  99% of America's money is controlled by a few hundred people, and yet, people are still making $10.00 an hour for work that should pay $20.00 an hour in light of the cost of living and the extreme profits companies are making.  So you support people making minimum wage with no health benefits?? Is that it? You're a big fan of corporations like Aetna, whose CEO makes 280 million a year?   The REAL crime is NOT that unions pay well and guarantee benefits, and protect workers.. the REAL crime is that brainwashed Americans think that it's patriotic to pay someone $10.00 an hour, doing 3 jobs now that used to be 1 person's job, with no health benefits, and no pension.  Really.. if you're not a billionaire, you're a fool and anything but patriotic.  Go China!!Â
It took them a year plus 1.2Mil to figure out that if you eliminate competition in the bidding process the price goes up. I was an estimator for a const co on the east side for 30 years and I just loved no competition proposals. Loved change orders even more. $$$$$$$$$$$$$$$$$$  !!
Love the photo of 2 guys building an entire ferry  they must make 1000 an hour for it to cost 80 million
@ballardanian
You need to practice observation. You missed the guy on the scaffolding and the other one up on the structure. Also not we are only viewing one corner.Â
Does that say $1.2 MILLION...For an audit?! Did they drink beer when they did it?
 @PacificNWlover They probably had a few bottles of Crown Royal, plus WA State Spirits and Liter tax :P
Maybe they didnt "overdesign" the boats, but boy, they sure screwed up.
First, they cover up all the issues associated with the boats, now, they try to say that they were below budget? Who are these people, and why on earth are they allowed to keep their jobs??Â
The original Island Home is fine. Ours are screwed up so bad because WSF changed the design to so many different components.Â
If somebody took a perfect car and took the wheels off it and doubled the price, the state would certainly buy it. Take out the engine and add a few more $$ to the price, and they would not only buy it, they would find some way to win awards for the design.Â
...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.
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David, It doesn't matter if they are under budget if those two ferries are still more expensive that what they should be, which they are.
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Run the Ferry system like a business. In other words since it was taken over by the state it has never paid MORE than 67% of the cost of operating it. Raise the fair to use it to pay for it.
 @Iarehere If they were still private, they would be turning a profit with out needing to raise the fare. The State is sloppy, and inefficient.Â
Hell, build them in China. They are probably using steel made in China anyway. Somebody down thread asked about the cost of transporting the vessel to Puget Sound. Peanuts, really, compared to $30 million savings.
 @Hagar not sure you are qualified to make a statement on delivery costs when you seem to be unaware of the Jones act.
 @calapete I was being facetious and I know full well what it costs to operate a 300' ship, open ocean, with a 22 man crew, thank you.
 @calapete  @Hagar The Glass Steagall act was repealed that controlled banking and protected all of us from greed so why can't the Jones act be repealed by the people who control congress? The laws don't mean much any more as long as some people in high places make money. We won't have anyone to build anything soon because no one wants to get their hands dirty and do the work that made our country strong.
 @swan  @calapete  @Hagar It's actually the Passenger Vessel Services Act (PVSA) that controls passenger travel, not the Jones Act (which is for cargo ships.) The main thing that's keeping the PVSA in law is the fact that it also applies to foreign airlines as well.
 @calapete  @Hagar Correct. It is actually prohibited by law for foreign-built and foreign flagged vessels to provide one-way passenger service between two US ports unless they make a stop at a distant (as in South American) foreign port in between, so unless you really want the Seattle to Bremerton run to include a stop in Colombia, that's not going to work.
I wonder if the audit findings also took into account the transportation costs of getting the ferries from out of state shipyard to Puget Sound? I am sure that that would not be cheap.
the typical misinformed are here today I see. The ferries ARE PART OF THE STATE HIGHWAY SYSTEM. end of story
NO! If we must subsidize the ferry fleet, at least keep those ship building jobs here at home.
just buy a fleet of paddle boats from green lake
What needs to happen is for the ferry system to be privatized. The government running a business is fascism and shouldn't be allowed except for the most serious of reasons. The ferry system is not something that has to exist for the state to do its job, so let private businesses compete to bring costs down for the public. I'm against privatization in most cases when it comes to the day to day business of government, but the ferry system has nothing to do with the government.
@Blindman Yeah, that works if they are a business. But they're not, just like state highways aren't a business. This one of the things government is SUPPOSED to do for citizens...subsidize the public highways. And the ferries are (constitutionally, I believe) highways...they even have state highway designations.
 @TheMadTurk  @Blindman But unlike regular highways, the ferry isn't needed, its just a convenience. Privatize it and let the competition begin.
 @Blindman Given all the bloat and regulations involved, I seriously doubt it would be feasible for a private company to run without taking huge losses on it.
 @Blindman sure, lets privatize all state highways. Brilliant dude.
 @calapete  @Blindman Gas taxes pay for the roads so there's no reason to toll them. There's no reason to be tolling the new bridges either. There's plenty of gas tax money for them if the legislature would quit stealing the gas tax money for other things.
@calapete While the Ferry System may CURRENTLY be part of the state highway system, there is no reason to MUST stay that way. If the state continues to prove it is incompetent to run this system, taking it to a private vendor may be necessary.
 @scared_citizen sure, like I said, privatized them all. Every state highway can be tolled. I pay a toll to take my highway, how bout you?
Just send more jobs out of state/the country! In 66 years, I have learned that bean counters are rarely accurate and sure can slant things the way they want it to go. As an example, was the cost of building a ferry on the east coast including getting it from there to here? The extra cost of having state inspectors travel across the country to check on it, etc., etc.? Who's in the pocket of the bean counters? The state decision makers?????Â
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See Oldster 70 below!  Old Farts Rule!!
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.
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How do the auditors know that the same problems wouldn't drive up the cost to build it elsewhere? The audit itself probably could have been done for a lot less than they paid.Â
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They should focus on ways to bring more shipbuilders to Washington, not how to take away their livelihoods.
How about we start by having the people that choose to live on an island, or work there , help pick up the tab
@teddybruce
And just when do you expect people riding the little toy RR and the rest of the mess transit start paying the full cost of that boondoggle. A significant part of the western part of the state consists of islands.  When they were formed the crust split apart, leaving very deep water between them. I am sure you are not aware of the fact(s) that there are two very expensive bridges across Lk. Washington, and another across Hoods Canal, but there are. OBTW, you could build some fine ferries with the money being wasted on Seattleâs âbig digâ.Â
 @teddybruce sure, as soon as you pay for the entire cost of your roads.Â
 @teddybruce This should be a non subsidzed cost. Let the islanders pay the entire cost of a ferry ride. The people that use the Narrows bridge pay for all of it.Â
@gigharbor While I want to agree with you, I can assure you that the Narrows bridge has some funding that is/was paid for by people who have never and will likely never use that bridge.
This is a bit more complex than just bid price. First, if the bids from instate yards are significantly higher than other US companies, what drives that cost? Second, money spent in state helps to drive the state economy, money spent out of state stays there. Third, what other state companies are contributing (suppliers) to the total construction. Sometimes when we look at only the bid price, we miss the benefit side which means state jobs; which means greater business volume through our retail stores, building industries, and reduction in the cost of social services. I am not advocating blindly paying a higher price without some real research and hard negotiating. What I am looking at is the net cost with real benefits factored in. By real benefits I am not referring to those ridiculous numbers from the liars in Olympia.     Â
 @oldster70 In-state businesses (Vigor) can bid against out-of-state businesses. If they want the work, they will offer the best bid. They win, the workers win, and the state wins.
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And we're supposed to be surprised that the State of Washington paid to much for something?? This is the exact reason we have a Deficit every year. Everyone knows when your having work done on "anything", or your building "anything", you get bids and determine which one works for you. NOT the State of Washington! We just pay the bill and never question anything. No one would pay $100,000.00 for a new BMW  if you can get one for $50,000.00.
This is nothing more than common sense in accounting when it comes to a budget. Get it together Washington!
 Boeing found out a long time ago it can do business cheaper somewhere else..
 @windowseat:Â
And yet they still have multiple sites here in Washington State that build planes. Hhmmmm.....
Only in Washington. Why are they looking at the policy that says that it has to be built in state. Why aren't they looking at why its so expensive to do business here! Nowhere did they mention that the company that built it was ripping them off or making extraordinary profit. So it must be the costs of doing business in WA.Â
@marvin -- it's done that way everywhere, so don't blame washington state government.
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And please don't misuse the wonderful Marvin the Martian in a partisan way (at least not partisan - earth politics). He's all about Mars, not Washington state.
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anytime you limit competiton you are going to have higher prices DUH!