Scotland ferries scandal: How the political gamble of building ferries on the Clyde sank along with the SNP's credibility

When Nicola Sturgeon announced Ferguson Marine as preferred bidder for the contract to build two new ferries, optimism among the SNP of the moment representing a politically symbolic revival of shipbuilding on the Clyde was sky-high.

More than seven years later and the facts of Scotland’s ferries fiasco prove not only was this optimism misplaced, but pose serious questions about the credibility of the SNP Government which, after 15 years in power, has nowhere to hide.

On Tuesday, a BBC Disclosure documentary for BBC Scotland published details of documents and emails which showed potential preferential treatment of the shipyard over its commercial rivals.

The allegations mean the question of whether the deal was done for political, rather than for sound economic and quality reasons, once again rears its head.

Former transport minister, Derek Mackay, and the First Minister, Nicola Sturgeon.

While the shipyard is now nationalised, having collapsed in 2019 and been rescued by the Scottish Government, it first hit the rocks in 2014 in the midst of the Scottish independence referendum campaign.

Two weeks prior to the vote, former first minister Alex Salmond guest edited the Daily Record newspaper.

Featuring in bold text on the front page, alongside a call to action for potential pro-independence voters, was an exclusive story announcing the decision of businessman Jim McColl that he would save Ferguson’s – the last commercial shipbuilder on the Clyde.

The Monaco-based businessman, with an estimated worth of £1 billion, was also a member of Mr Salmond’s council of economic advisers and a key pro-Yes public figure.

In the new BBC documentary, he claims he was looking at investing in Ferguson’s two months prior to the shipyard’s eventual, painful, first administration.

Less than a month after the defeat at the ballot box for the SNP, the contract notice for the design and build of the now infamous vessels 801 and 802 for the Clyde and Hebrides route was published, with a deadline of November 19 for initial responses.

By March 31, 2015, seven bids had been received from six shipyards, including Ferguson Marine, Polish shipyard Remontowa, German shipyards FSG and Nordic Yards, Sefine Shipyard in Turkey, and the English shipyard Cammell Laird.

Unbeknownst to any of the rival shipyards, the BBC documentary suggests it was during this period Ferguson Marine received potential preferential treatment that helped it to ultimately win the contract.

This included receiving a 424-page technical specification, compiled by ferry operators CalMac, for the ferries while commercial rivals had to make do with a 125-page, much less detailed document from CMAL.

Disclosure states a significant amount of FMEL’s bid was simply copy-pasted from the larger specification document.

CMAL told the BBC they did not pass the document to FMEL, with Ferguson obtaining it from design consultants who had worked on preparing the original tender documents for CMAL.

In a letter to a local MSP, the then-transport minister Derek Mackay outlined the need for a full builder’s refund guarantee for the vessel was only a “preference” and that “alternative approaches” had been taken in the past.

This contradicted CMAL’s own procurement documents, which said such a guarantee was a “mandatory minimum requirement”.

Questions remain over whether CMAL broke its own rules by allowing FMEL’s bid to be shortlisted without the refund guarantee.

Emails obtained by the BBC show FMEL said it would “endeavour to comply” with the request, contrary to public statements from CMAL the yard had left this section of their bid blank with officials therefore assuming it would be adhered to.

Bid assessors CMAL also held a “strictly confidential” meeting with Ferguson Marine to discuss details of the bid, the documentary claims, with no other bidder offered the same type of meeting.

More evidence of this preferential treatment is demonstrated by the fact FMEL’s design of the ships also changed after the bid submission deadline, with assessors scoring their bid on a different design after they requested more details in May 2015.

Experts working for CalMac also said a rival design, from Remontowa, best matched the requirements for the operators, while the price of the Ferguson Marine bid also dropped from a high of £110 million – almost £40m more expensive than the cheapest option – to £97m.

The decision that FMEL had become preferred bidder was announced at the yard in August of that year.

In September, FMEL confirmed to CMAL what it believed had already been set out, that it could not offer a full builder’s refund guarantee.

Over a few weeks, amid heated emails and rising panic about the contract’s flaws, the ferry infrastructure body advised Transport Scotland of “significant risks” relating to the project.

It received ministerial sign-off to agree the contract, despite board members claiming CMAL wanted to re-start the entire procurement process or reopen negotiations with Remontowa, with the announcement made at SNP conference.

In a report earlier this year, Audit Scotland said there was not sufficient documentary evidence as to why ministers believed the risk of not having a builder’s refund guarantee was worth taking.

Ministers have repeatedly failed to outline why this was deemed acceptable.

At the yard, what followed was colossal failure after colossal failure, with the working relationship between CMAL and FMEL collapsing in a matter of months due to disagreements on design as costs spiralled out of control.

Despite this, Nicola Sturgeon launched hull 801, named the Glen Sannox, in 2017 with painted-on windows, as money disputes escalated between CMAL and FMEL.

By April 2019, the ferries were already late and years from being finished. Despite millions in Government loans, FMEL directors on September 9, 2019 announced the company would be put into administration as it failed to cope with the strain of the order for two ferries and other cashflow problems.

Following nationalisation the timetable for the delivery of the two vessels continued to slip, partially due to the Covid-19 pandemic, which saw work all but stop, but also due to remedial work to fix prior mistakes.

A parliamentary inquiry by the rural economy and connectivity committee concluded there was a “catastrophic failure” in the management of the procurement, and said the processes for awarding contracts for shipbuilding was no longer fit for purpose.

This overview of the story does not touch on other problems, such as the controversial role of turnaround director Tim Hair, appointed to improve the yard, workers losing faith in management and, most crucially, the level of impact on islanders from an aging, failing lifeline ferry service.

Work is ongoing at the shipyard, but there remains “serious risks” relating to the construction of the Glen Sannox, which remains “behind schedule” ahead of its planned service entry deadline of May 2023.

The aim for hull 802 is for the ship to enter service by the end of next year, with costs likely to be more than £150m over-budget.

What remains unknown is to what extent the key ministers of the time – Ms Sturgeon, John Swinney, Keith Brown and Mr Mackay – pushed informally or formally for Ferguson’s to be considered more favourably by CMAL.

The question is conspiracy or cock-up, and, while the latter is far more likely, ministers cannot hide from the truth this has been an historic low point for the SNP’s infrastructure projects.

Surely, at some point, someone in government will take responsibility for the near-decade long fiasco that has left island communities stranded and underserved?

Don’t hold your breath.

All episodes of the brand new limited series podcast, How to be an independent country: Scotland’s Choices, are out now.

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