State will try again to find shipyard to build $325 million oceangoing ferry

A year after an effort that failed to attract any bidders, the state is again looking to hire a shipyard to build a replacement for the ferry Tustumena.

Design work is still not complete, however.

The new ferry, which will mostly serve Gulf of Alaska communities, is expected to cost almost $325 million, with the federal government picking up much of the cost. It would give Alaska its first new mainline ferry in decades.

In a meeting with the Alaska Marine Highway Operations Board on Aug. 25, ferry system director Craig Tornga said the state remains on track to issue a request for proposals next month.

"We're trying to get that turned around so we can get this out on the street before the end of September, and we'd like to be awarding the yard by the end of the year," he said.

The 296-foot-long Tustumena was built at a yard in Sturgeon Bay, Wisconsin, in 1964 and has sailed one of the roughest ferry routes in the world for almost six decades. It will have to work a while longer: A new ship isn't expected before 2027 - at the earliest.

The Tustumena regularly carries cargo, vehicles and passengers from Homer to Kodiak, then down the Alaska Peninsula to Unalaska in the Aleutian Islands, but the rough seas and ocean-borne corrosion have taken a toll.

In 2016, part of the ship's hull cracked badly enough that the ferry system began restricting it from sailing in strong storms. Those issues have been addressed and the ship remains safe to sail, but its lifespan is limited.

The state has two new Alaska-class ferries, the Hubbard and Tazlina, built in Ketchikan five and six years ago, but those ships were designed for the confined waters of Southeast Alaska. They don't have staterooms.

The Tustumena replacement will be more complicated than the Alaska-class ferries, and the state can't afford problems on the new ship, ferry captain Keith Hillard told the operations board in July. "It's not something we want to rush. We want something to go out as a very solid package, otherwise it's going to cost the state a lot more money," he said.

The Department of Transportation has been planning for the replacement vessel for more than a decade.

The proposed ship has already caused some concerns. The Department of Transportation put the project mostly on hold during Gov. Mike Dunleavy's first term in office before soliciting proposals from shipyards last year.

Federal law requires that a U.S. shipyard build the new Tustumena, but despite a nationwide call, no company offered a bid and the state canceled the request in July last year. Tornga told the operations board that the proposed management agreement for the contract was slanted so much in the state's favor that no shipyard would take it.

That language has been redrafted, and he appeared optimistic when he briefed the board on Aug. 25.

The request for proposals will go out even though the ship's design hasn't been finished. Since design work began, the ship's propulsion system has been redesigned three times, most recently in May of this year.

It's gone from a standard diesel-fired ship to a diesel-electric design and now to a hybrid diesel-electric capable of running (for short distances) on battery power alone.

That third change prompted the resignation of Greg Jennings, the Department of Transportation's project liaison, who criticized the design's growing complexity. In a letter to the state ferry board and state legislators, he said that when he was brought on board, 2027 was a realistic delivery date.

"Now, however, it is my opinion that 2027 is impossible and the lack of certainty in design requirements now present in the project make even 2028 delivery nearly impossible," he said.

Jennings declined a phone interview seeking additional comment.

Tornga and other department officials have pushed back against Jennings' criticism, saying the project remains on schedule.

Tornga told board members on Aug. 25 that hiring a shipyard this year will allow the yard to participate in final design work and start ordering components.

"If we're working with the yard, they can get started on doing the production engineering for their yard work, and if there's any long lead items, that's what we're really rolling on there. So we're really rolling into construction late in 2024," he said.

Tornga said the new ship would be finished in 2027, though he added, "That's a guess at this point. Until we get a yard to give us their full schedule, we're just estimating at this point."

If all goes as planned, other new ferries will follow the Tustumena replacement. A draft long-range plan calls for a second oceangoing ship to replace the Matanuska and/or Columbia, both decades old.

Tornga said that could be an incentive for shipyards bidding on the Tustumena replacement. "No shipyard likes to build just one of anything; we're trying to put (the Matanuska replacement) right behind it," he said in July.

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