Gov. Mike Dunleavy wrote to the Philippines consul general in San Francisco a little over a month ago offering up the Malaspina ferry.
“This vessel is surplus to our fleet, is in need of some repairs, but does have some service life left,” the Republican governor’s one-page letter reads. “We would be willing to provide the vessel to the Philippine government or to a private ferry company in the Philippines free of charge.”
The May 20 letter included a pamphlet on the 408-foot ship and a link to an 11.5-minute YouTube video of a 2015 walk through posted on a ferry vessel fan page.
Dunleavy’s apparently unsolicited offer was included as part of a routine records request for the governor’s correspondence filed by Alaska Public Media.
The Malaspina was built in 1963 and has had several overhauls over the decades. Its last sailing was in late 2019 when the state put the ship in layup rather than invest at least $16 million in needed steelwork.
The decision to do a cold layup went against the advice of union engineers who said without a regular maintenance crew the ship would deteriorate. Freezing temperatures led to some minor flooding in staterooms and a fact-finding tour by coastal lawmakers and aides reported it was clear there was no intention of the ship being used again.
A skyrocketing price tag to return mainline ferry to service
Recent estimates have put the price tag upwards of $45 million for complete overhaul including new engines, according to the Department of Transportation.
DOT solicited bids on storing the vessel last month. It says only one offer came in from the Ward Cove Group where it’s been sitting for about a year and a half. It’s contracted to pay about $400,000 a year. Add the monthly power bill to heat the ship, and it’s paying roughly $447,000 a year to tie it up.
With such a high price for a ship on the sidelines, the Dunleavy administration has said it’s looking at deep-sixing the vessel to cut its losses.
“We are actively looking at working with the EPA to scuttle the ship and potentially salvage some of the steel or resale value,” Alaska Marine Highway System General Manager John Falvey told the House Transportation Committee on March 20.
He says there has been only tepid interest in buying it. And as its fleet has diminished in recent years, the state has also struggled to offload other ferries: one went to a scrap yard in India, and two more sold to a Spanish ferry company for a tiny fraction of what the state originally paid.
But at the time, Falvey said there would still be a public process.
“If we were to sell it, we would have to, of course, per state requirements, put it out to a sealed bid, just like we’ve done the two fast ferries,” Falvey told lawmakers.
Unusual offer gets mixed reviews from ex-procurement officials
So that’s the backstory for when Gov. Mike Dunleavy penned a letter to the Philippines consulate in San Francisco offering the ship up for free.
“I would be stunned — I am stunned — in reading the letter that it wasn’t advertised and put out for auction or something similar,” said Barry Jackson, a former senior state procurement official of 30 years. He says it’s understandable that a state asset could be a liability, but that there’s a process for disposing of public property.
“If you want to get away from the bills that this ferry is costing, advertise that you want to give it away — and see what happens,” he added.
Other veterans of the procurement are more charitable. Jason Soza was hired as the state’s top procurement official during the administration of Gov. Sean Parnell; his six-year term was allowed to expire in 2019.
“It may look at first blush like we’re just giving away something that’s worth a lot of money,” Soza told CoastAlaska. “But when you start digging into it, you might find that there are a lot of costs associated with it.”
He says state law waives normal procurement rules for giving things to other governments. But he recognizes the governor’s letter also floated “a private ferry company” as a possible receiver which isn’t normally allowed.
Sitka lawmaker: Alaska Marine Highway System operations board should be given a chance to work
Dunleavy’s offer comes at a time of transition for the ferry system’s governance. One of the few pieces of legislation to pass this session was a bipartisan bill that created an oversight board for the marine highway. House Bill 63 passed unanimously but still awaits the signature of the governor who has given mixed signals over his support.
Rep. Jonathan Kreiss-Tomkins, D-Sitka, was one of HB63’s co-sponsors.
“We passed this bill, to sort of write a new chapter for governance and management of the ferry system,” Kreiss-Tomkins said Monday. “And then concurrent to that, the governor sort of, on a lark, offers up one of the core assets of the ferry system: the Malaspina to the Philippines for the cost of $0.”
He says the new ferry operations board should be seated before the state starts offering to give away ships.
The governor’s spokesperson Jeff Turner said Monday there hadn’t been any response from the letter. The governor’s office declined to comment further.
The Consul General of the Philippines in San Francisco says its chief diplomat will visit Juneau in July. But a spokesperson said in a follow up email that it’s part of the consul general’s normal outreach for Filipino citizens in Alaska — not a ferry fact-finding mission.