Hansard

When the then Rural Economy and Connectivity Committee published its report on the construction and procurement of ferries in Scotland in December 2020, it concluded that there had been

“a catastrophic failure in the management of the procurement of vessels 801 and 802, leading it to conclude that these processes and structures are no longer fit for purpose.”

That was no small claim from a cross-party committee, and one that should have made the Scottish Government and all its agencies sit up and take notice.

The committee called on the Scottish Government to commission an independent external review of the processes for public procurement of ferries. The Government did so. That report, “Project Neptune”, has been completed by Ernst & Young and is being sat on by Transport Scotland. Jenny Gilruth promised to publish it when I asked her about it last month, yet Transport Scotland continues to get its way. We demand that it be published in full immediately.

The Rural Economy and Connectivity Committee also called for the management of the ferries contract and the role that was played by Transport Scotland to be reviewed by Audit Scotland. That review has taken place and its conclusions, which have been published today, are damning. I will start with that, but I will also deal with the wider issues because at the heart of the matter is the fact that the Scottish National Party Scottish Government is letting down islanders and those who need to get to islands. That cannot go on.

Today, the Auditor General has been scathing in his criticism. His report lays bare the shambles of the contract to build the two ferries. Ministers were warned not to give the contract to Ferguson’s. The cost is two and a half times the original budget, and ministers are tied into paying whatever it takes. The cost could go higher—it has done today, by £8.7 million, which is not a drop in the ocean. There are major failings at the shipyard that still need to be resolved. The Auditor General’s report leaves the SNP holed below the waterline when it comes to its record on ferries.

Today, Stephen Boyle said:

“The failure to deliver these two ferries, on time and on budget, exposes a multitude of failings. A lack of transparent decision-making, a lack of project oversight, and no clear understanding of what significant sums of public money have achieved. And crucially, communities still don’t have the lifeline ferries they were promised years ago.

The focus now must be on overcoming significant challenges at the shipyard and completing the vessels as quickly as possible. Thoughts must then turn to learning lessons to prevent a repeat of problems on future new vessel projects and other public sector infrastructure projects.”

Of course, the Auditor General’s report says what we already know—that the project to deliver the two new ferries has been fraught with problems and delays over six years. Vessels 801 and 802 were originally expected to be delivered in May and July 2018 respectively, but they are now almost four years late, and we have heard about a further delay.

The total cost of the project is currently estimated to be at least £240 million—that was confirmed earlier—which is two and a half times the original vessels’ budget, and there is apparently no limit to the final cost, despite what the cabinet secretary said earlier. According to the report, the Government is committed to paying any extra costs

“regardless of the final price.”

The Scottish ministers announced Ferguson Marine Engineering Ltd, which I will refer to as FMEL, as the preferred bidder for the £97 million fixed-price—“fixed-price”; if only!—contract to design and build the two vessels in August 2015.

The contract notice for the design, construction and delivery of the vessels was advertised in October 2014. We have been told today that both boats will be delivered next year. Even if that is true, it will have been nearly 10 years in total by the time they take passengers. We have designed and built rockets to take us to the moon and back more quickly than that.

The Auditor General says that, in September 2015, FMEL confirmed that it was unable to provide Caledonian Maritime Assets Limited—CMAL—with a full refund guarantee, which was one of the mandatory requirements of the contract.

Although CMAL subsequently negotiated a partial refund guarantee with FMEL, it remained concerned about the significant financial and procurement risks that that created. CMAL had the option to reject the bid at that point, and it told Transport Scotland that it wanted to restart the procurement process.

Transport Scotland alerted Scottish ministers to CMAL’s concerns and to the risks of awarding the contract to FMEL. The Auditor General says:

“There is insufficient documentary evidence to explain why Scottish ministers accepted the risks and were content to approve the contract award in October 2015.”

CMAL thought that there were too many risks to award the contract, but the Government thought that it knew better. Why, when the Ferguson’s bid was the highest, and when the Government’s ship-buying arm said no, did ministers plough ahead? I asked the cabinet secretary that question earlier, but I got no answer.