KETCHIKAN (AP) -- A Ketchikan shipyard operator will receive $1.5 million as part of a negotiated settlement with the state over delays in returning the ferry Columbia to service last year.
The settlement ends a dispute between Alaska Ship and Drydock and state transportation officials. Each sought millions in compensation.
Under terms of the settlement, the shipyard operator will complete remaining contract and warranty work and will drop claims against the state for additional compensation.
Gov. Tony Knowles announced the settlement on Monday during a trip to Ketchikan. Knowles called it, fair, just and consistent with Alaska law.
''This settlement recognizes and respects the vital role the shipyard plays in keeping the Alaska Marine Highway System vessels running for the traveling public, and it is great news for Ketchikan jobs and its future economic development,'' Knowles said in a statement.
Doug Ward, director of shipyard development for Alaska Ship and Drydock, said continued business with the ferry service is critical for the company's future.
''The Alaska Marine Highway System is our primary customer and is critical to the company's survival,'' Ward said.
Alaska Ship and Drydock had a $10.2 million contract to refurbish the Columbia and make repairs after a switchboard fire in June 2000.
But the work was finished late and the ship did not return to service until July 19, causing the Alaska Marine Highway Service to lose revenues during the peak tourism season.
State transportation officials alleged the shipyard operator should pay $4 million in damages.
But Alaska Ship and Drydock blamed the delays on poor state specifications and more than $287,000 in additional work added to the project. The shipyard operator sought an additional $3.1 million.
Both sides began mediation in October in an attempt to avoid litigation.
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