Ferguson selects Florida shipbuilder to build WA fleet of electric ferries

SEATTLE – Washington Gov. Bob Ferguson chose the sole out-of-state shipbuilder to construct the state’s new generation of electric ferries, opting for the lower-cost bid over supporting Washington’s local shipbuilding industry.

Eastern Shipbuilding Group of Panama City, Florida, will build three hybrid-electric ferries for the state system for $714.5 million – below the state’s own estimate and far below the only other bid, from Nichols Brothers Boat Builders, in Freeland on Whidbey Island.

After careful consideration and conversations with legislative leaders, I believe Eastern is the best option to build these critically important vessels at a fair cost to our taxpayers,” Ferguson said in a statement.

Washington State Ferries’ new vessels are part of a nearly $4 billion project to completely electrify the fleet by 2040. That includes retrofitting six diesel ferries to hybrid electric, building 16 new hybrid-electric vessels and adding charging stations to 16 terminals.

The first boat is expected to be ready to sail in 2029, according to the ferry system, but the state is offering Eastern financial bonuses if it’s delivered earlier. Washington Transportation Secretary Julie Meredith said in a TVW interview in May that boats would be delivered in 2030 “at the earliest.”

In a statement, Joey D’Isernia, CEO of Eastern, said his company was “honored” to chosen for “this transformational project in the great State of Washington.”

“For over four decades, our skilled team has built high-performing ferries – many of which remain in service today – including the Long Island and Staten Island Ferries,” D’Isernia said. “We look forward to delivering best-in-class vessels that will serve the residents and visitors of the Puget Sound region for generations to come.”

Eastern has built hundreds of vessels, including U.S. Coast Guard offshore patrol cutters, tugboats, passenger ferries, fishing boats and fireboats, according to its company website.

Gavin Higgins, CEO of Nichols, said he was “shocked” and “disappointed,” and said Ferguson’s decision marked the end of ferry building in Washington state.

“This is state money going to support another state with weaker labor and environmental rules,” he said. “Ferries will never be built in Washington again. It’s a loss of a huge legacy.”

Eastern’s bid is only part of the cost to build new boats. Considering the cost of owner-furnished equipment, construction management, crew training and risk contingencies, the first ferry will cost approximately $405 million.

Each boat after the first will cost less, according to the ferry system , because “contingency risk decreases with lessons learned from each previous construction.” With that in mind, the state said the second will cost $360 million, and the third $325 million.

State Sen. Marko Liias, D-Edmonds, said he supported Ferguson’s decision, considering the need for new boats and the tough budget decisions state lawmakers grappled with in the recent legislative session.

“For too long, our Puget Sound communities have felt the strain of service disruptions caused by our aging ferry fleet. That’s why I support the governor’s decision to move forward with the lowest-cost bid for three new hybrid-electric ferries,” Liias said in a statement.

Liias, who chairs the Senate Transportation Committee, said Ferguson’s decision did not close the door for future shipbuilding on the Puget Sound.

“While this was the first bid for new ferries in years, it certainly won’t be the last,” he said. “I’m confident Washington’s shipbuilders will have many more opportunities to compete for and win future contracts.”

State Rep. Greg Nance, D-Bainbridge Island, who sponsored the Mosquito Fleet Act in the Legislature this year to invest in passenger-only ferries to supplement ferry services, said Ferguson faced some tough decisions with ferry service in the state.

“Ultimately, I think the governor’s plan will get more ferries out there sooner,” Nance said, adding that Ferguson’s decision helps Washington lawmakers act as “judicious stewards of taxpayer dollars.”

Sen. Curtis King, R-Yakima, the ranking member of the Senate Transportation committee, agreed, saying, “It makes sense to save that money for these vessels.”

Ferguson’s choice of Eastern is sure to draw criticism. For years, the state required its boats to be built in Washington. But after a falling-out with its longtime contractor, Vigor, the Legislature loosened a state rule requiring the ferry fleet to be made in-state.

That led to a slew of concerns from lawmakers and advocacy communities, mainly about not requiring out-of-state builders to meet Washington’s relatively stringent environmental rules and providing a 13% bid credit for in-state contractors that do have to meet those rules.

Yet even with consideration of the in-state credit, Eastern’s lower bid was clearly more attractive to Ferguson. Eastern’s bid estimated the first boat would cost $251.3 million, and put its total bid for three boats at $714.5 million. Nichols Brothers estimated a first boat would cost $338.6 million, and its three-boat bid is more than $1 billion.

The state had previously estimated that boat one would cost $256.8 million.

Higgins noted that he knew his bid wasn’t a slam dunk and that the bidding process was a “dogfight.” But he said he thought Ferguson would split the bid and have each shipbuilder construct a boat each, for quicker delivery of two boats.

In the end, he said he was focused on the missed chance for training a new generation of tradespeople.

“I wish the state the best. But what I’m really disappointed about is the lost opportunity that this would’ve brought to the state,” Higgins said. “I don’t know where people think they learn this work. They learn by doing it.”

As a modified design of Washington State Ferries’ Olympic class boat, the new ferries will each have space for 1,500 passengers and 164 vehicles. Below deck, water-cooled batteries will fuel the hybrid-electric propulsion system, both built by the Swedish-Swiss electric equipment manufacturer ABB.

Each time a vessel comes into the slip, it will connect and charge for 20 minutes, the amount of time a ferry typically sits at the terminal while passengers and vehicles unload and load.

The work to build new ferries comes at a perilous time for the state system. The ferry system has an aging fleet of 21 ferries with hundreds of millions of dollars in deferred maintenance. It needs 26 boats to run at full service, and has been running a reduced schedule for years with numerous cancellations and delays.

Soon after taking office this year, Ferguson said the ferry system would add three boats to its operating fleet, up from the 15 vessels it has been relying on for years and returning it to “full domestic service.”

The bidding began last year, but timelines were pushed back as shipbuilders raised concerns about the specifications of the new ferries. Initially, 15 shipbuilders showed interest, but that winnowed down to three shipyards, and eventually just two submitted bids. Weeks before choosing Eastern, Ferguson said he was taking his time making a decision of such magnitude.

“It’s my first time as the governor making a decision like this so I want to make sure I’m hearing all perspectives on those bids,” Ferguson said. I just want to make sure I’m doing it right. It’s nothing more complicated than that.”