Solitary challenger in contest for CalMac contract

Sources said small-scale of the CalMac services was barrier to larger potential competitors. Picture: Allan Milligan

Sources said small-scale of the CalMac services was barrier to larger potential competitors. Picture: Allan Milligan

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CALMAC will have only a single challenger for the next £1 billion west ferry contract, The Scotsman has learned.

Serco, which has already won the NorthLink (Northern Isles) ferry contract from CalMac’s parent body, today confirmed it was the other potential bidder.

“We are content with the level of interest shown ”

Transport Scotland

The news dashes ministers hopes of attracting more competitors by extending the CalMac deal to up to eight years – two years longer than the last contract.

It comes after the previous lacklustre contest to run the service in 2007 ended with the second of two shortlisted challengers to CalMac pulling out.

However, the Scottish Government’s Transport Scotland agency said it would press ahead with the latest competition and still planned to issue an official “invitation to tender” in June. The winner is expected to be announced in May next year.

Serco has still to comment, but it said when the contest was launched in February: “We are currently evaluating the opportunity.”

One ferry expert said the lack of interest was because CalMac was too small-scale and specialist an operation. He said it used smallish ferries when much of the industry operated larger vessels, with more potential for on-board sales.

However, Professor Alf Baird of Edinburgh Napier University, said: “The single large bundle [of routes] and having to use the existing fleet/crews is the problem.

“There is no scope for innovation given the preference for a large bundle, plus any bidder having to use the existing fleet and CalMac crews.

“Current arrangements favours the existing public ‘institution’ that is CalMac, and the unions.

“Serco appear quite happy to utilise state-owned assets as it means they don’t incur any capital expenditure - all they can try to do is squeeze out costs to make a small profit.

“Their result with NorthLink is not so impressive - very little has changed - albeit on Stromness-Scrabster they reduced the daily frequency from three round trips to two to save fuel - which in turn might help generate them an operating surplus.

“But that kind of strategy is no use when serving islands with no competing service.”

In February, transport minister Derek Mackay announced the new eight-year contract to run 26 routes from Lewis to Kintyre from October next year.

Up to £1 billion of Scottish Government funding will be available to support the largely loss-making services – the equivalent of £125 million a year.

Mr Mackay said the longer deal “will make it more attractive to potential bidders by giving the operator more opportunity to deliver service improvements and efficiencies over the course of the contract.”

V.Ships and Gourock-Dunoon operator Western Ferries abandoned the race for the last CalMac contract, saying it was too restrictive. Serco won the NorthLink contract for ferries to Orkney and Shetland three years ago, sparking a strike by unions about changes to workers’ conditions.

Labour transport spokesman and Highlands and Islands MSP David Stewart said: “I strongly believe our lifeline ferry services should be in public ownership, which is in the interests of passengers, workers and the taxpayer.

“The privatisation of the Northern Isles ferry services in May 2012, when Serco were awarded the contract, led to the first industrial action on Northern Isles ferries for over 30 years.”

A Transport Scotland spokesman said: “We received two completed pre-qualification questionnaires (PQQs) before the required time for submission.

“We are content with the level of interest shown in operating these important transport services. The next step is the evaluation of the responses to the pre-qualification questionnaires and beyond that the issue of the invitation to tender.”

A Serco spokesman said: “We have submitted a response to the PQQ that has been issued by Transport Scotland.”

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