'Build in Washington' rule may be cast overboard to obtain new ferries affordably and quickly

Every new car ferry added to the Washington State Ferries fleet over the past 50 years was built at a Puget Sound shipyard. Now, state lawmakers are considering a break from past policy in order to obtain new vessels faster and cheaper for the troubled state ferry system.

On Monday, state legislative committees heard mixed testimony on proposals to cast aside long-standing "Build in Washington" procurement rules for new ferries. Identical House and Senate bills with bipartisan support would allow shipyards nationally to bid on contracts to build five new plug-in hybrid electric car ferries.

"We have aging boats. So, it is urgent for us to acquire new vessels to keep this system iconic and moving forward," said state Sen. Marko Liias (D-Mukilteo), the Senate Transportation Committee chair. "We need these vessels on board as quickly as possible."

Frequent ferry riders testified Monday that new boats are desperately needed to address nagging reliability issues at the ferry system and boost service levels. Port Townsend resident Tom Thiersch said "protectionist" rules lead the ferry system to overpay to the detriment of taxpayers.

"The Build in Washington mandate has and will increase the cost per boat by about 50% while being little if any long term benefit to our state," said Thiersch, who chairs his county's ferry advisory committee. "Subsidizing shipbuilders in Washington is simply not worth it."

However, representatives from organized labor raised concerns about jettisoning the Build in Washington requirement and suggested adding more provisions to favor a local bidder.

"If we put these out to a nationwide bid without some protection in terms of wages, there's no way that our shipyards can be competitive," said Gordon Baxter, a metals trades lobbyist for 12 unions active in Washington shipyards. "We ask that you not build these boats at the expense of the workforce or businesses in Washington state due to choices we have made to make Washington a better place to do business, live and work."

The proposed legislation currently includes a credit of between 5%-10% on the bid price for vessels built in Washington state. The purpose of the in-state construction incentive is to recognize the benefits of local job creation, apprenticeships, economic spin-offs and easier oversight.

State lawmakers have budgeted around $1 billion to buy five new "Olympic Class" ferries capable of carrying 144 cars and 1,500 passengers. As envisioned in the 2019 WSF long-range plan, the ferry system would receive one new ferry every year from 2023 through 2027. Contracting snafus have now delayed that delivery schedule by at least two years.

In 2019, the Washington Legislature authorized a contract extension with shipbuilder Vigor to design and build the desired five mid-sized ferries in Seattle. Washington State Ferries has since received the design from Vigor, but last year broke off negotiations on the construction contract when the two sides landed far apart on price and risk management terms.

"The national solicitation approach being proposed for this discrete set of five ferries, while disappointing, is understandable from the state’s perspective, so long as it is limited only to these vessels," said Jill Mackie, senior vice president for public affairs at Vigor, in an email Tuesday.

Mackie said her company was neutral on the pending legislation in Olympia. Another Washington shipyard, Nichols Brothers on Whidbey Island, dispatched its lobbyist Monday to say that the loss of economic benefits to the state if the new ferries were built elsewhere would far exceed the initial price savings. Vigor has delivered the last twelve new ferries to WSF from its Harbor Island shipyard, in some cases outsourcing large sections such as the superstructure to partners in Freeland or Tacoma.

In neighboring British Columbia, BC Ferries accepts bids from provincial, national and international shipyards. It took delivery of six new ferries in three years in its most recent procurement from Damen Shipyards in Romania for around $300 million. U.S. maritime regulations require ships carrying passengers between U.S. ports to be built in America, so an international procurement is off the table for Washington State Ferries.

Washington State Ferries currently has 21 ferries in its fleet. The oldest vessel in the fleet was launched in 1959 and two others date to the late 1960s. The ferry system eventually wants to increase its fleet to 26 vessels and accelerate a planned shift from diesel to cleaner plug-in hybrid electric propulsion. The five ferry procurement now being debated only gets the system part way there as two of the new vessels would stabilize the fleet and the other three would replace vessels due to retire.

The late-to-surface bills to revise ferry procurement will probably be amended and voted out of committee next week. This year’s legislative session is scheduled to wrap up by April 23.

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