The Ferry King (the unabridged edition)

From USA Today:

WASHINGTON — Sen. Ted Stevens, who championed $452 million in federal funding for Alaska’s notorious “bridges to nowhere,” has directed the Navy to build an experimental ferry it once rejected to serve a little-used port in a remote area of his home state.

The high-speed ferry will connect Anchorage to Port MacKenzie in the Matanuska-Susitna Borough at an estimated cost to taxpayers of $84 million. The project follows the same route as one of the two “bridges to nowhere,” which the non-partisan Taxpayers for Common Sense and others spotlighted in 2005 as examples of wasteful projects promoted by members of Congress that benefit few people.

The 3-mile ferry route will turn a 2½-hour drive into a 15-minute trip to Port MacKenzie, which has two businesses that employ about 40 people combined.

Original DVD cover.

In an e-mail to USA TODAY, the Office of Naval Research (ONR) said it did not request the funding. The Navy said it rejected Lockheed Martin’s proposal for a similar prototype to transport military personnel and equipment, saying the project was not a high priority.

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The ferry alone is now expected to cost $58 million, the Navy statement said. That’s nearly double the Navy’s original $29.9 million agreement with the shipbuilder.

The “biggest cost driver” has been its unique design, the Navy said. The design is complicated by a retractable center hull that is raised to reach high speeds and lowered to offload passengers and vehicles.

A former chairman of the Senate Appropriations Committee and its defense subcommittee, Stevens inserted nearly $50 million into defense and transportation spending bills between 2002 and 2006 for the project and related costs. Stevens added $20 million in this year’s pending defense bill, according to the legislation.

One company that could benefit from the ferry is VECO Corp., the oil services firm at the heart of a federal corruption probe that led to an FBI search of Stevens’ home July 30. The company, whose former chief executive is a business partner of Stevens, signed a letter of interest six years ago to open a manufacturing facility at the port once the ferry begins operations, which is now expected in 2009.

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VECO spokesman Tim Woolston declined to comment. Tom Maloney, the company’s vice president of business development, told the Anchorage Daily News, in 2005 that the ferry — which can carry up to 26 cars and 150 people — would allow the company to bring workers to the site more cheaply and safely than driving them from Anchorage.

VECO chief executive Bill Allen and vice president Richard Smith pleaded guilty in May to bribing state lawmakers to limit a state tax on oil production and resigned. Allen testified in a related case this month that one of the lawmakers he bribed was Ted Stevens’ son, Ben, a former state senator.

Allen also testified he oversaw renovations to Ted Stevens’ Alaska home in 2000 that more than doubled its size, and had VECO employees do some of the work.

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The ferry’s design came from the world’s largest defense contractor, Lockheed Martin, which also has ties to Stevens. Lockheed pitched the design to the Mat-Su Borough in 2002 after the Navy rejected its proposal.

With funds secured by Stevens, the borough paid Lockheed $2 million in 2003 to design the ship.

Lockheed’s lobbyists include Stevens’ brother-in-law, William Bittner. Lockheed paid Bittner and his law firm $420,000 to lobby on defense spending issues from 2002 through 2006, the firm’s disclosure reports say. Bittner said he never lobbied for Lockheed on the ferry.

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New ethics laws ban any senator or staffer from being lobbied by the senator’s immediate family, which does not include brothers-in-law.

Campaign finance reports show Lockheed’s political action committee, executives and lobbyists gave Stevens’ political committees $63,650 during 2002 through 2005, when the first legislative-directed funding, known as earmarks, were awarded for the ferry project.

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Once Stevens’ earmarks directed the Navy to build the ferry, the ONR hired Alaska Ship & Drydock under an obscure type of agreement called “other transaction authority.” Those agreements are not formal contracts and therefore are exempt from many federal contracting rules, such as those requiring detailed cost justifications.

The shipyard is reimbursed for its costs plus a guaranteed profit, according to the Pentagon announcement of the agreement.

Critics such as the non-partisan Project on Government Oversight (POGO) have said such arrangements are vulnerable to waste.

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The Navy said it used the arrangement because the ferry is a prototype and the shipyard hadn’t done military work. The shipyard had built only a conventional ferry before getting the Navy work.

Alaska Ship & Drydock couldn’t handle such a large project without extensive upgrades, such as a submersible ship lift, shipyard executive Doug Ward and state transportation official Nancy Slagle told the Alaska Legislature. The state used $9 million in earmarked federal transportation money for upgrades in 2006, Slagle said.

Ward declined to comment.

About five months before the Navy awarded it the ferry project in August 2005, Alaska Ship & Drydock hired former Stevens chief of staff Steven Silver as its sole Washington lobbyist to obtain “funding for activities” at the shipyard, lobbying records show. The shipyard paid Silver $48,000 in 2005 and 2006. Silver did not respond to repeated requests for comment.

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Former Senate staffer Winslow Wheeler, who handled defense spending issues for three Republicans and one Democrat and is now with the non-partisan Center for Defense Information, said the ferry is an example of earmarks siphoning money from worthier defense projects.

“He’s loaded up defense bills” with projects that have “no direct usefulness for national security,” Wheeler said of Stevens.