WASHINGTON TIFF, DREXEL STALL YARD DECISION

WASHINGTON TIFF, DREXEL STALL YARD DECISION

The bankruptcy of Drexel Burnham Lambert Inc. has delayed for months a decision on the opening of a shipyard here against a background of squabbling between staffs of Commerce Secretary Robert A. Mosbacher and Massachusetts Sens. Edward M. Kennedy and John F. Kerry, Washington sources say.

The decision involves $10 million in federal loan guarantees for Massachusetts Shipbuilders Corp. in its bid to reopen the Fore River Shipyard in Quincy, Mass., last operated by General Dynamics Corp. in 1987. Sens. Kennedy and Kerry, both Democrats, have been lobbying for the loan guarantees but suspended efforts in the wake of the bankruptcy at Drexel, which canceled its financing for the yard in January, a spokesman for Sen. Kennedy said Wednesday.But Commerce Department officials tell a different story. The senators'

staffs backed away from a January meeting with Commerce's Economic Development Administration to review its feasibility study for the shipyard, insisting instead on a high-level meeting with Secretary Mosbacher, one official said. That meeting was refused, and the fate of the loan guarantees has been in limbo ever since, according to the official.

"The staffs of Kennedy and Kerry opted not to meet with us," Joyce Thompson, EDA spokeswoman, said Tuesday when asked about the squabble. "They insist on meeting with the secretary and not just the EDA staff. It's a bit unusual."

An official close to Sen. Kennedy dismissed the story as politically motivated Wednesday, saying the EDA is out to kill the project.

"We're not going to (fool) around with some staff people who aren't supportive," the official said.

Meanwhile, the Drexel bankruptcy in January apparently called a temporary halt to the tiff as the financing package for the yard fell apart.

"We have agreed to put the Commerce Department application on hold in the wake of the Drexel bankruptcy," Paul Donovan, Kennedy press secretary, said Wednesday. Officials in Sen. Kerry's office could not be reached for comment.

Peter Gwynn, Massachusetts Shipbuilders president, said that until new financing plans are in place for the yard, "there's no point in even talking to (the) EDA." Mr. Gwynn said "several people" are interested in the shipyard and new financing should be secured by June. Although the EDA has not released its study, it is believed to recommend against loan guarantees on the grounds that another shipyard in New England would not be viable. Ms. Thompson declined to disclose the contents of the study but indicated there was some skepticism at the EDA about the proposal.