For the first time in more than 50 years, Washington State Ferries will contract with an out-of-state shipyard to build new vessels.

Democratic Gov. Bob Ferguson made the final call to accept the low bid from Florida-based Eastern Shipbuilding Group to build three new hybrid electric ferries, each capable of carrying up to 160 cars and 1,500 passengers. The vessels will replace aging boats in the state fleet.

Ferguson passed over a considerably more expensive bid from in-state shipyard Nichols Brothers Boat Builders. Whidbey Island-based Nichols Brothers and a range of allies from around the north Puget Sound lobbied the governor unsuccessfully to split the contract for the new ferries to secure local jobs and boost the region’s shipbuilding industry.

“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 announcing his decision Tuesday afternoon.

The state accepted Eastern Shipbuilding’s bid of $714.5 million for three new ferries, with deliveries estimated to begin in 2029.

However, the total cost to taxpayers will be much higher because the state plans to purchase the hybrid electric powertrain separately and made allowances for construction oversight, early delivery incentives and change orders. Ferguson’s office said this brings the cost of the first vessel to approximately $405 million, the second to $360 million, and the third to $325 million. The cost and risks decrease with lessons learned from each previous build.

Sen. Marko Liias, D-Edmonds, chair of the Senate Transportation Committee, supported Ferguson’s decision to go with the low bid.

“The budget constraints we face — combined with rising construction costs driven by tariffs and inflation — mean we must make the most of every taxpayer dollar to deliver the ferries we urgently need,” he said, adding it won’t be the last boats built. “I’m confident Washington’s shipbuilders will have many more opportunities to compete for and win future contracts.”

Civic and business leaders in Washington urged the governor to choose Nichols Brothers and its sister yard, Everett Ship Repair, arguing that Ferguson should consider the jobs that would be created and economic benefits derived from using an in-state contractor.

“This is very disappointing news for the working men and women in Snohomish and Island counties and the state of Washington,” said Ray Stephanson, president and CEO of Economic Alliance Snohomish County.

The Washington Legislature previously set aside about $1.3 billion to build new ferries over the next six to eight years. Money is not the only consideration. The ferry system and the state’s Democratic leadership want to reduce the ferries’ air pollution footprint by switching to battery propulsion as much as possible, too.

Eastern Shipbuilding Group submitted the low bid for the state’s desired plug-in hybrid vessels, according to a summary of the bids posted by Washington State Ferries in mid-May. The price tag (without the state-supplied powertrains) was roughly in line with the state engineer’s in-house estimate.

The Panama City, Florida-based company has experience building car ferries for numerous other governments, including in North Carolina, Florida and the Staten Island line in New York. The three new Staten Island ferries were delivered late due first to hurricane damage in 2018 to the shipyard and then due to the COVID-19 pandemic.

Nichols Brothers submitted a competing bid that was considerably higher, even after including a 13% credit authorized by the Legislature to incentivize home state construction.

A third shipbuilder, Philly Shipyard, was expected to bid, but didn’t in the end. Seattle shipyard Vigor Marine, which built all of the state’s new ferries since the late 1970s, also chose not to bid. After the state got to loggerheads with Vigor over a ferry construction contract extension around five years ago, the Legislature directed the ferry system to solicit bids from shipyards nationwide for the first time in decades.

The Nichols Brothers and Eastern Shipbuilding bids both included escalator clauses that state House Transportation Committee Chair Jake Fey predicted in May would push prices higher. The escalators put Washington taxpayers on the hook to pay for unpredictable cost increases, such as rising steel prices or tariffs.

‘Real disappointment’ at in-state shipyard

Nichols Brothers CEO Gavin Higgins said his company would not appeal the contract award to his Florida competitor. But he made it clear in an interview Tuesday that he felt “real disappointment” that the state missed the boat to grow its shipbuilding industry and invest in the next generation of apprentice builders.

“We’ve lost the opportunity to hire over 1,300 people and bring them to work. Who’s going to do it now?” Higgins said.

In May, after the state made the ferry bids public, Higgens wrote a follow-up letter to Ferguson to propose a split contract. He laid out a “best case scenario” in which Eastern would build two new ferries in Florida and Nichols Brothers would simultaneously build two more in-state. Higgins said a good chunk of the added cost of building in Washington would be offset by tax collections on the business activity generated by the enhanced local shipbuilding industry.

“I think we made a pretty strong case,” Higgins said, before adding that the “headwinds” posed by the state’s union-level wage and apprentice utilization requirements, small business and veteran set-asides, strict environmental rules and a mandatory DEI officer added costs that could not be overcome.

Cost roughly tripled over past seven years

The 144-car Suquamish was the most recent of the workhorse Olympic-class ferries upon which the new plug-in ferry design is based. The diesel-powered Suquamish was delivered to WSF in 2018 at a cost of about $122 million. Debate about how to proceed with further vessel acquisitions in that size class has stretched from then until now.

During this dickering, the state pivoted to electrification, costs shot up and the reliability of the existing aging fleet went down.

The bid request published by WSF included the high-level design for a plug-in ferry. Drawings show 460-foot-long boats that resemble a slightly elongated version of the diesel-powered Olympic class ferries delivered between 2014 and 2018. However, the new design has just one passenger deck stacked on top of the two auto decks.

The center of the ship’s hold will be packed with racks of water-cooled rechargeable batteries so the ferry can sail fully on electric power most of the time. The engine room will also feature twin diesel generators as a backup source of propulsion.

Assuming they use green electricity to charge, the new ferries should achieve a large reduction in fuel consumption and an associated reduction in global warming emissions.

A rendering of the new hybrid-electric ferry design that went out to bid last year. (Photo courtesy of WSDOT)

WSF tentatively plans to deploy the new ferries to the Mukilteo-Clinton run first, probably followed by the Seattle-Bremerton route.

What about cheaper options?

Republicans, who are in the minority in the Legislature, pushed unsuccessfully for a cheaper diesel ferry option to be put back on the table. Washington State Ferries leaders have been consistent in warning against reverting to conventional diesel power because that would necessitate a lengthy redesign and re-bid.

Conservative initiative sponsor Brian Heywood decried the $714 million contract to build “only three over priced hybrid ferries” in a post Tuesday night on the social media site X.

“It is likely that new clean diesel ferries would have been at least half of that cost,” Heywood said.

BC Ferries has also been in the market for new car ferries and has been able to acquire new vessels at far lower cost. Unlike Washington State Ferries, BC Ferries can solicit bids from shipyards worldwide. This past month, the privatized provincial ferry company stirred considerable controversy at home by announcing it would contract with a Chinese shipyard to acquire four large new car ferries. BC Ferries declined to specify the price, but made clear that no other bidders came close to the cost savings the Chinese state-owned yard offered.

Building ferries to serve domestic U.S. routes at a foreign shipyard is prohibited under a century-old federal law known as the Jones Act.

Of late, the Trump administration and a bipartisan contingent of lawmakers in Congress have highlighted the need to make the American shipbuilding industry more competitive. But President Donald Trump’s recent statements on the matter make no mention of jettisoning the longstanding made-in-America requirements.

Washington State Ferries currently has 21 vessels of various sizes and ages in its fleet, making it the largest public ferry system in the nation. The agency’s long-range plan contains a goal to grow to 26 ferries to provide reliable service on every route, with allowances for maintenance tie-ups and a vessel in reserve.

This summer, the ferry system will get nearly back to operating its full pre-pandemic schedule, missing only a second boat on the Port Townsend-Coupeville run during midweeks and the long-suspended international crossing to Sidney, B.C.

Washington State Standard reporter Jerry Cornfield contributed to this report.