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Originally published Sunday, September 18, 2005 at 12:00 AM

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State will let other builders pursue ferry job

At least two local shipyards likely will submit new proposals to build four state ferries after the state dropped its appeal of a court...

Seattle Times staff reporter

At least two local shipyards likely will submit new proposals to build four state ferries after the state dropped its appeal of a court order that invalidated part of its selection process.

Last February, the state decided that Todd Shipyards of Seattle was the only company financially qualified to build the new ferries.

Now, J.M. Martinac Shipbuilding of Tacoma will be allowed to submit a technical proposal to build the new ferries, a $284 million project. It would join Todd, and perhaps Nichols Brothers Boatbuilding of Whidbey Island, in competing to replace the steel-class boats built in 1927.

After the state selected Todd in February, Martinac appealed. In June, a state hearings judge ruled that the financial pre-qualification of Martinac should not have been denied.

The state said it would appeal the decision and, in an unusual arrangement, the appeal was to go to Mike Anderson, head of Washington State Ferries.

Yesterday, Doug MacDonald, head of the state Department of Transportation (DOT), said Anderson won't act on the appeal.

"The upshot is we're not going to appeal to ourselves," he said.

Unresolved issues

The state, MacDonald said, was faced with three options: appealing to itself, starting all over, or — what was ultimately decided — putting together an expert panel to oversee the ferry-bidding process.

Gov. Christine Gregoire, with MacDonald, made that decision after about a six-week review, MacDonald said.

Still, several issues remain unresolved:

• The original plans called for four 130-car ferries, but Anderson said it may make more sense to build 144-car ferries to accommodate the growing population of Kitsap County. The change, expected to cost about $15 million, would have to be approved by the Legislature.

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The state has six Issaquah-class ferries built in the 1980s as 130-car ferries, but with required safety and security equipment, they have room for only 124 cars.

• With soaring fuel costs, the state has to decide how to pay to run ferries without digging deeply into construction funds. "The key piece is that people at DOT and the ferry system are very concerned how to fit the program into the emerging difficulties of the financial picture," MacDonald said, adding that none of the new boats is now in jeopardy.

• State law requires that the boats be built in Washington state and that the job be awarded to the lowest bidder. MacDonald said he agrees with that, but said it narrows the number of companies able to pursue the project.

"We're playing with a very small hand. Most of the cards have been taken out of the deck," he said. "We have fewer options. We're in the process of figuring out how to do it by low bid. We don't want to get into a belly-up situation that caused us so much grief; we don't want to repeat the Issaquah-class situation."

He was referring to ferries built by Marine Power & Equipment of Seattle between 1979 and 1982. Those ferries were plagued with mechanical troubles, forcing the state to spend millions on repairs and generating years of lawsuits involving Marine Power, which settled out of court in 1985 and filed for bankruptcy in 1986.

• The ferry system could face another blow if voters approve Initiative 912 on the November ballot. It would repeal the 9.5-cent gas-tax increase approved by the Legislature this year. If it passes, money for one new state ferry would evaporate — a ferry the state was considering for a direct Southworth-to-downtown-Seattle route.

Starting over

MacDonald said Martinac hasn't formally been notified that the state has dropped its appeal, and he doesn't know whether Nichols Brothers would also bid on the new ferries. Todd has said it intends to bid on the ferry contract, despite the Martinac appeal.

While Nichols was considered in the initial financial-qualification process, it pulled out after being promised significant subcontract work by Todd. Nichols did not appeal the state's selection of Todd to build the ferries.

MacDonald said the next step in reopening the bidding is to distribute technical specifications on the new ferries and to choose the expert panel to oversee the bidding process.

Todd Shipyards, in operation since 1916, built the last state ferries, the Jumbo Mark II class, between 1997 and 1999. That contract produced the ferries Tacoma, Puyallup and Wenatchee.

Todd also built two Jumbo-class ferries in 1972, the Spokane and the Walla Walla.

The state had hoped that construction could begin in 2006 on the new ferries, with the first boat ready for service in 2008. It's unclear what delays the state faces with the Martinac dispute.

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com

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