NEWSFLASH: VPA rejects outsourcing offers in favor of reorganization

   The Virginia Port Authority Board of Commissioners voted today to restructure the state-owned operating company, Virginia International Terminals, instead of outsourcing cargo and vessel-handling operations at the Port of Virginia to private terminal management firms, the VPA said in a statement issued this afternoon.
   State officials spent almost a year evaluating two competing bids to manage and invest in the port for almost five decades. APM Terminals made an unsolicited offer to consolidate operations under its umbrella for about $3.1 billion to $3.9 billion in cash, taxes, annual payments and new infrastructure. A consortium of JP Morgan Chase, Maher Terminals and Spanish port operator Noatum bid about $3.1 billion to retain control over the port complex.
   The VPA said the two bids undervalued the current port assets and its revenue potential, the same reasoning Secretary of Transportation Sean Connaughton gave in September 2010 for rejecting three unsolicited proposals from real estate developers and investors to operate three container terminals in the port.
   Gov. Bob McDonnell threw out the previous board in mid-2011 and replaced it with handpicked members after expressing dissatisfaction with the Port of Virginia’s performance in attracting container cargo and turning a profit. The unsolicited bid allowed by the state’s Public Private Partnership Act was made by APMT in the midst of an extensive review by the board on how to reduce costs and operate the port more like a business than simply an economic development arm of the government. Concurrent with the bid-review process, state and port officials continued developing structural and leadership reforms, some of which are mandated by recent legislation.
   “We are transforming the Port of Virginia to meet a changing and increasingly competitive environment,” Board Chairman William Fralin said in a statement. “We will move forward as a stronger, leaner organization that is better-positioned to serve the ocean carriers and port customers, attract cargo to Virginia and be more accountable to Virginia taxpayers.”
    The board will convert Virginia International Terminals from a non-stock corporation to a single-member Virginia limited liability corporation under more direct control of the VPA. The new structure will eliminate duplication, such as having dual marketing departments, and increase efficiency, the VPA statement said….