Ferries fiasco: CMAL blames FMEL and Ministers for ‘catastrophic failure’ and ‘wasted money’

Senior members of the ferry infrastructure public body, CMAL, told the Public Audit Committee they were also concerned about the announcement of the yard as preferred bidder, made by Nicola Sturgeon at the yard in August 2015, risked the procurement process in its entirety.

They added they were unaware until evidence sessions of the committee that Scottish Government ministers had told Ferguson Marine no builder’s refund guarantee was required for the contract six months before the shipyard was announced as preferred bidder.

sign up to our Politics newsletter

The construction of Glen Sannox and hull 802, which are set to operate on the Clyde and in the Hebrides and initially budgeted at £97m, is more than five years late and more than £150m overbudget.

This additional cost has been met by taxpayers after the contract was awarded to Ferguson Marine without a full builder’s refund guarantee.

A scathing Audit Scotland report said there was not sufficient documentary evidence explaining why ministers considered the financial risk of the contract acceptable and the yard was later nationalized in 2019.

CMAL executives told MSPs they were effectively overruled by ministers on the decision to award the yard the contract and that they wanted the tender to be restarted.

They also denied claims made by Transport Scotland that at the point of contract award they were content.

CMAL executives gave evidence to the Public Audit Committee.

Erik Østergaard, the former chair of CMAL, said “we were not” and without the financial assurances from the government, CMAL would “not have placed that order”.

I added: “The ministerial approval process was not normal. CMAL made no recommendation to Transport Scotland, to the minister.

“Stating that we were content with the contract is not correct. We were not.”

Kevin Hobbs, the chief executive of CMAL, said the board was forced to go ahead with the contract award after ministers provided a shareholder instruction to do so.

She added that FMEL had been honest about their inability to provide a full refund guarantee that they would have been “redlined and struck out” as with any other bidder failing to do so.

He said: “What we were seeing when we were doing the assessment was from all the bidders, if they could provide refund guarantees.

“It was only after preferred bidder status was given that all of a sudden the rules were changing in front of our eyes.

“FMEL knowingly and willingly entered into that contract…what we saw in the bid was very very clear that they could provide what was needed and they made no comment about the fact they couldn’t.”

Mr Østergaard, who now heads up David MacBrayne/CalMac, was also asked whether in his 30 years of experience in shipping he had ever known a ship to be built without a full builder’s refund guarantee.

He said: “Not that I can collect.”

CMAL was later provided with a letter of comfort confirming the Scottish Government would meet the costs of any overrun and that CMAL would not become insolvent.

Mr Østergaard added it was “obvious” there was a government interest in FMEL receiving the contract.

Morag McNeill, interim chair of CMAL, also told MSPs that the announcement of the preferred bidder status of FMEL risked the entire procurement process.

“Our preference was for that to be done on a confidential basis and for there not to be a public announcement,” she said.

“We thought there was risk to the procurement process… and inevitably a negotiation that’s undertaken in a very public domain makes it quite difficult.”

Mr Hobbs was also heavily critical of the quality of management during the construction of the ferries while the yard was owned by Jim McColl.

He said there was a “catastrophic failure of management” and added the decision to launch the Glen Sannox was “absolutely” done too early, adding they warned Mr McColl a launch was “too premature”.

“If you want to follow the money and where the money has gone, the money was effectively wasted,” he said.

He added: “There has been the rewriting of history in relation to our involvement.

“We don’t meddle, we cannot meddle, but of course when something goes catastrophically wrong it is very very easy to slope your shoulders and basically blame somebody else.”

Want to hear more from The Scotsman’s politics team? Check out the latest episode of our political podcast, The Steamie.


Related Posts

George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

Leave a Reply

Your email address will not be published. Required fields are marked *