Instead of privatization, ASG is seeking a “Public Private Partnership of the American Samoa Shipyard” for the government owned facility, which collects just over $2 million annually, according to the Request for Proposal (RFP) notice issued last Friday by the Office of Procurement, with a closing date of no later than 2p.m. Jan. 30, 2015.

The winning private partner would guarantee an investment in the shipyard of $10 million over a five-year period, the RFP states.

Earlier this year, Gov. Lolo Matalasi Moliga informed the Shipyard Services Authority board that he wants to privatize the shipyard and requested that the board come up with an RFP draft. The board followed through, sending the information to the governor’s office for review before the actual RFP was issued by Procurement.

Lolo’s move to privatize the shipyard followed a review of the facility's financial status. He believed that privatization was the practical alternative “instead of reverting back to the past practice of relying on government subsidy.”

Lawmakers last year also called on the shipyard board to look at privatization to prevent the government having to put in money in at a future time when the facility may face financial woes.

In the RPF, the government provides background information on the facility. For example, that it was originally established on government land with welding and fabrication shops being built for dockside repairs for military and merchant ships. But with the developments in the tuna fishing industry over the past few decades, the shipyard expanded its operations and services to cater to the needs of fishing vessels, government vessels and other types of commercial vessels.

The present facility includes a 2,500-ton dry dock, a machine shop and a welding shop with sheet metal presses, painting and sand blasting equipment and an electrical and mechanical workshop.

According to the RFP, in a 12-month period, the “shipyard normally dry docks about 28 vessels of all types and it has an annual turnover from this and dock side repair work of approximately $2.1 million.” (See below on financial status of the shipyard.)

Prior to the shipyard being a semi-autonomous agency of the government, the Shipyard Services Authority facility — which sits on about 5 acres of land — was leased consecutively to two different private sector operating companies from 1985 to 2011. (Both private sector companies were based on the mainland).

It is now ASG’s intention “to outsource operations” of the shipyard to a private sector operator with proven expertise in shipyard operations and development according to the RFP, which emphasizes that ASG’s priority is to promote economic development and the shipyard is a key component of that development within Pago Pago Harbor.

“ASG is willing to enter into an agreement that would encourage expansion of ancillary or harbor related assets by a new operator,” it says.

The RFP outlines the scope of work for the contractor awarded the partnership contract. For example, the contractor is to operate and develop the shipyard into a successful business that earns a healthy return for the contractor as well as ASG.

It also stresses that financial statements and operating information “must be transparent and readily available” to ASG.

Regarding the current workforce, the contractor is to protect the jobs of all existing employees with guarantee of continued employment for at least 12 months after takeover.

The RFP calls for the contractor to provide, among other things, long term commitment to the shipyard and to the general economic development of the territory as well as a commitment to protect ASG assets and equipment.

The contractor also agrees “to invest up to $10 million” in the shipyard over a period of five years.

ASG, on the other hand, is to provide contractor with things such as inventory of shipyard assets and their condition; latest operating report of the shipyard as well as audited financial statements since 2011; and assist with any permitting requirements.

According to the RFP, the services provided by the successful bidder will be under a negotiated firm fixed price contract agreement with incentives that will benefit the contractor and ASG.

Industry sources told Samoa News that both Tri Marine International and Dongwon industries — the South Korean based owner of StarKist Co., and StarKist Samoa — would benefit greatly from partnership with ASG on the project.

While in the territory late last month, StarKist Co., president and chief executive officer Andrew Choe was asked during a news conference if the company was interested in investing in the shipyard.

Choe told reporters, “We are talking to the governor, to see if it's something that we can work together on. However, there is nothing definite at the moment.”

However, industry sources say that StarKist has been talking with the government about the shipyard since the time Brett Butler was general manager of StarKist Samoa.

Samoa News understands that Tri Marine has had unofficial discussions with ASG on the shipyard, but there are no specific details to report at this time.

Details of the RFP and other pertinent information is available at the Procurement Office in Tafuna. See last Friday’s Samoa News for address information.

SHIPYARD BUDGET

For current fiscal year 2015, the shipyard is forecasting revenue of $1.96 million with 28 vessels for dry-docking.

In FY 2014, which closed on Sept. 30, 2014, the shipyard’s approved budget was $2.03 million. But by the end of fiscal year, the authority accumulated a loss of $142,000 caused by eight weeks of down time: six weeks to perform extensive repairs to the railway and install the new hauling chain; and two weeks due to severe bad weather, according to the shipyard’s FY 2014 fourth quarter performance report.

Additionally, the shipyard was unable to invoice a large amount of work done on a purse seiner that was carried over into October, the start of FY 2015. (In FY 2014, the shipyard was able to service 24 vessels.)

During FY 2015 budget hearings in September this year, shipyard officials told lawmakers in advance that the authority was expecting a loss at the end of FY 2014 due to the down time. The officials also made the same projection when asked by Samoa News prior to budget hearings.

As previously reported by Samoa News, in FY 2013, the shipyard’s budget was at $2.17 million and at the close of the fiscal year, it made a profit of $230,000 — with this money going back to improvements to the shipyard. In FY 2012, the shipyard’s surplus was about $115,000.