10 Things To Know About the Ongoing Scotland’s Ferry Fiasco

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The decision to build two CalMac ferries at the Ferguson shipyard in Port Glasgow has led to years of controversy. A BBC Disclosure documentary has shed new light on the saga. Here are 10 key things that we learned during the investigation.

Jim McColl was already looking at buying the yard before it went into administration

The Ferguson shipyard had been struggling for a decade as it was undercut by overseas shipbuilders, particularly in Eastern Europe.

Since 2012 it had been kept going with orders for two small diesel/electric hybrid ferries for CalMac, but the yard had lost so many key staff it felt unable to take on a third order. Scottish Enterprise was aware of its financial problems.

Businessman Jim McColl confirmed to BBC Disclosure that he looked at the business at least two months before it went bust. Senior people from his Clyde Blowers Capital investment company visited the yard to look at the business potential.

He said this “whetted our appetite” but it was too “messy” to buy the yard at this stage as there were problems, such as debts, which administrators would need to clear up.

The BBC understands that one issue deterring potential buyers was an underfunded final salary pension scheme.

The former owners hoped workers would be kept on during the change of ownership, but within hours of administration most were made redundant.

CalMac’s specification was based on a ship designed for a Swedish route

The Scottish government gave the go-ahead for the procurement of two new large CalMac ferries in the summer of 2014, with the original plan to name the preferred bidder by end of March 2015.

A leaked email from early July reveals that the head of vessels at its procurement agency CMAL believed such a timetable would be “hugely challenging”.

Despite this warning, this timetable was adopted, giving ferry operator CalMac just three weeks to draw up its Specification of Technical and Operational Requirements.

CalMac produced an unusually detailed 424-page document, much of it adapted from a ship design it had worked on during an unsuccessful bid to run a Swedish ferry route to Gotland.

In the rush, some errors slipped though, such as references to “passenger cabins” which were not relevant to CalMac ships.

The procurement timetable was later extended, with preferred bidder not announced publicly until 31 August 2015 and contract signing in October.

Ferguson was allowed onto the shortlist despite not meeting a mandatory requirement

The ferry procurement was run under something called a restricted procedure that meant interested shipyards had to fill out a “pre-qualification questionnaire” or PQQ – in effect a screening process to select who would be invited to tender.

As well as assessing shipyards’ capabilities, it set out the requirement – written in red capital letters – for evidence confirming the yard could provide a Builder’s Refund Guarantee, which protects any advance payments issued by the buyer. This was to be provided in the form of a banker’s letter.

CMAL has previously said that during the tender process Ferguson made “no comment” on a section of the draft contract relating to guarantees – and it took this as “tacit acceptance” of the condition.

The BBC Disclosure investigation, however, uncovered emails from December 2014 which show Ferguson had already made it clear to CMAL that as a newly-formed company it was struggling to obtain a bank guarantee.

It initially filled in the PQQ questionnaire saying only that it would “endeavour to comply with your request”.

When this was queried, it said it was having discussions with the Scottish government regarding “bonding for ship contracts in general” and that the issue will “hopefully be sorted”. It also stated that it did not believe a parent company guarantee was appropriate.

On this basis CMAL’s finance director approved Fergusons’ progression to the shortlist.

Ferguson had been given a £12m order from CMAL a few weeks earlier for a small ferry, MV Catriona, without a requirement for such bank guarantees.

Read the full article here.

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Source: BBC

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