Ferguson Marine ferries contract ‘a catastrophic failure’

The procurement of two ferries from Ferguson Marine was “a catastrophic failure”, a Holyrood committee has said.

The yard was due to deliver two ferries to be used on the west coast by 2018 at a cost of £97 million.

MSPs were told last year by then-finance secretary Derek Mackay that “mismanagement” by the Port Glasgow shipyard led to delays and overspends.

The vessels are expected to be delivered by 2022 and 2023 at almost double the original cost.

An extensive inquiry by the Rural Economy and Connectivity Committee at Holyrood said the procurement process was “not fit for purpose” and called for an “independent external review” to take place.

Throughout the inquiry, witnesses spoke of a project fraught with problems, including a breakdown in the relationship between Ferguson and Caledonian Maritime Assets Limited (CMAL), the Scottish Government-backed procurement body.

In a 129-page report released on Wednesday, the committee said the Scottish Government was too willing to press ahead with the project despite the risks involved and stated CMAL and Transport Scotland’s due diligence was “inadequate”.

It concluded: “Based on the extensive range of evidence it has received, the committee believes that there has 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.

“The committee therefore calls on the Scottish Government to commission an independent external review of the processes for public procurement of ferries to ensure appropriate lessons are learned for the future and to keep the Committee updated of its progress and conclusions.”

The committee also found “strong evidence” to suggest Ferguson Marine continued to build the ships incorrectly to ensure it would receive “milestone payments” that CMAL was legally obliged to give it after completion of certain stages of the project.

The report said: “The committee has been appalled to learn that CMAL was legally bound to continue to make milestone payments on the ferries contract despite ongoing concerns about the performance of the contractor.

“The committee also questions why CMAL continued to make milestone payments in a situation where the sign-off of the basic design of the vessels had not been secured from class or flag.

“Furthermore, there is strong evidence that the contractor deliberately proceeded to construct specific sections of the vessel either out of sequence or not according to the proper specification purely as a means of triggering milestone payments on the contract.”

The Scottish Conservatives described the report as “damning”.

Shadow transport secretary Graham Simpson said: “There was lax to non-existent scrutiny over the procurement process and over the financial management of the contract.

“The SNP have ended up spending £230m and the bill is still rising for two ferries that should have been delivered for £97m two years ago.

“The buck should stop with government but nobody has yet taken responsibility for this fiasco.”

A Scottish Government spokeswoman said: “Scottish Ministers were grateful for the opportunity to present evidence to the committee during its inquiry.

“We will consider the report and respond to its recommendations in due course.

“We remain fully supportive of the efforts of Calmac, CMAL and Transport Scotland in delivering ferry services on the Clyde and Hebrides Network and to the Northern Isles, but we also recognise the challenges in doing so and the need for continuous improvement to optimise delivery.”