A mediator will attempt to resolve a dispute between the state and a Ketchikan shipyard operator. Each contends the other owes millions due to delays in returning the ferry Columbia to service last summer.
Alaska Ship and Drydock and state Transportation Department officials will begin mediated talks in Seattle late this month, said Doug Gardner, an assistant attorney general.
"We're going to make an attempt to resolve the matter before either side gets entrenched in litigation," Gardner said.
The shipyard operator had a $10.4 million contract to refurbish staterooms on the state's largest ferry as well as repairing a switchboard damaged by a June 2000 fire.
But the work was finished more than 40 days late and the ship did not return to service until July 19 this year. Because of that, the Alaska Marine Highway System lost ridership during the peak tourist season.
State officials say the shipyard operator owes $4 million in damages as a result. Total damages are about $87,000 per day, said Bob Doll, the department's Southeast regional director.
But Alaska Ship and Drydock blames the delays on poor state specifications for the work and $287,347 in more work added to the project.
The state should set aside the $4 million penalty and pay the shipyard operator $3.1 million in additional compensation, said Doug Ward, a company spokesman.
Ward said he was encouraged by the news that a private mediator will be used to try to reach a settlement.
"With an early and equitable settlement, it will provide the opportunity to maintain continuous operations at the Ketchikan shipyard," Ward said. "That, I think, is everyone's goal here."
The financially struggling shipyard now employs 37 people, compared to more than 100 a year ago, Ward said. "This time of year we should be ramping up," he said.
The Ketchikan Gateway Borough Assembly recently set aside $1 million as a bond guarantee to allow the shipyard operator to pursue routine state ferry maintenance overhauls.
Alaska Ship and Drydock is one the borough's major employers and operates the shipyard for the Alaska Industrial Development and Export Authority.
Numerous people have expressed fear that the dispute with the shipyard operator may impact the local economy, Doll said. "I will observe, however, ASD is a private company and they are not the only company that can operate the shipyard in Ketchikan," he said.
Delays in getting the Columbia back in service had a ripple effect in other towns along the Inside Passage, Doll said.
The smaller ferry Malaspina was rerouted to take some of the passenger load, but Haines still experienced about a 50 percent reduction in normal vehicle traffic, said Robert Venables, city economic development director.