"Sticker Shock" - Steamship Approves $27 Million Contract To Retrofit New Vessels

Despite some deep reservations and criticisms of the Steamship Authority’s management, the boat line’s board of governors on Friday voted unanimously to pay $27 million to retrofit two out of the three used vessels purchased last year to replace its aging freight boats.

The low bid from an Alabama shipyard to convert the two former offshore supply vessels at a cost of $13.6 million each was significantly higher than the Steamship’s projection of $9 million per boat. The misfire on the cost estimate prompted consternation by some members of the Steamship’s board of governors, but in the end, all members voted to move forward with the vessel conversions on a timeline that would put them in service by the summer of 2024.

“You’ve put the board in a tough position with the colossal failure on the estimate,” said Steamship Authority governor Peter Jeffrey, who represents Falmouth, and who even suggested the boat line consider selling the vessels and starting over from scratch. “Now we’re left with what is the most financially prudent thing to do for the Authority.”

James Malkin, who represents Martha’s Vineyard, said that he was “still having sticker shock” over the $27 million contract to retrofit the vessels.

The conversion of the two vessels, which previously plied the waters of the Gulf Coast in the offshore oil and gas industry, includes dry-docking, modifying the lengths, adapting the sterns and adding new bulkheads, retrofitting the fuel tanks, and adding HVAC systems, among other changes, as well as funds for contingency. The Steamship worked with the naval architecture and marine engineering firm Kirilloff & Associates to develop a plan to convert the vessels and estimate the costs to do so. But the Authority’s projections were off in many areas, leading to the boat line’s governors asking general manager Bob Davis for an explanation.

“We missed this by a wide margin and we can go back and look at how this was done,” Davis said. “It (bids coming in above original estimates) seems to be happening nationwide. But regardless these vessels remain a viable avenue for us to modernize our fleet. The vessels we are currently using are 43 years old.”

The Steamship received two bids for the retrofitting project, and Alabama Shipyard LLC, of Mobile, AL, was the low bidder at $39.9 million. The other bid was submitted by Bollinger Amelia Operations LLC, of Amelia, LA, for $62.5 million. After receiving the low bid, the Steamship worked with Alabama Shipyard to reduce the scope of the work and push back the delivery date and bring down the costs from $39.9 million to $27 million.

"We're in a bind to go ahead," said Steamship Authority governor Robert Jones, of Barnstable. "Let's lick our wounds and be done with it. I still don't understand why we got so much out of phase. But we need to go ahead. I'm stymied here. I don't have words for how far off we are."

Even so, the $27 million price tag is just for two out of the three offshore supply vessels the Steamship Authority acquired last year. As for the third?

“At this point, there are different requirements on the third vessel because the other two have been more recently dry docked,” Davis said. “We need to develop that package.”

The three vessels acquired by the Steamship Authority in 2022 to replace its aging fleet of freight boats are all offshore supply vessels (OSVs) previously used in the Gulf Coast’s offshore oil and gas industry. After a naming contest sponsored by the Authority, the vessels were renamed the M/V Aquinnah, the M/V Monomoy, and the M/V Barnstable. The boats are currently being stored in Louisiana. The Steamship Authority will be using federal funds for the retrofitting project that were made available through a memorandum of understanding with the Cape Cod Regional Transit Authority. Once the project is completed, the three vessels will replace the Steamship Authority’s freight boats the M/V Gay Head, M/V Katama, and M/V Sankaty.