Kennicott dispute may be close to settlement

State may pay just $500,000 of $46 million claim

Posted: Friday, November 09, 2001

The state of Alaska reportedly faces a comparably minor payment to a Mississippi shipyard in a long-running dispute about construction of the ferry Kennicott.

Halter Marine Group of Gulfport, Miss., which originally filed $46 million in claims against the state, tentatively has agreed to walk away for about $500,000, said Bill Cummings of the state Department of Law.

"The state got out for peanuts in relation to the overall claim," Cummings said today.

He emphasized that a draft settlement agreement has not been signed, with a Halter subcontractor still pursuing some claims. Officials at the state Department of Transportation said that as a result they are not yet ready to comment.

But Cummings said the outcome is a vindication of sorts for DOT. Critics have cited the Kennicott dispute as evidence that the agency has management problems.

"DOT, through its marine highway system, administered the contract and administered the contract fairly," Cummings said. "And the actions it took were within the four corners of the contract."

Halter Marine officials could not be reached for comment. The phone line at the company headquarters in Mississippi was being checked for problems, according to a recorded phone company message. The company has been in bankruptcy proceedings.

Former Halter attorney Marcus Slater of Washington, D.C., said the company is now being represented by Peter D'Apice of Dallas, Texas, who could not be reached for comment this morning.

Halter built the Kennicott, the newest ferry in the Alaska Marine Highway System, for about $77 million. The 380-foot-long ship started service in July 1998, with the state and the company differing about who was responsible for a 52-day delay in completion. The state requested warranty work for hundreds of problems, including poor deck drainage.

Halter, alleging it built the vessel at a loss, sought to recover $23 million for "contractual overreaching" and "continuous changes" in the construction of the Kennicott, and another $23 million that the

company said it had to forego in building other ships due to problems with the Alaska project. An administrative appeals hearing was scheduled for March 2002.

The Kennicott was the first large, ocean-going passenger vessel designed and built in the United States in decades.

Bill McAllister can be reached at

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