Ferguson ferry contract 'announced by Nicola Sturgeon before deal agreed' - Jim McColl

The contract to build two CalMac ferries was announced by Nicola Sturgeon before a deal had been agreed, former Ferguson Marine shipyard boss Jim McColl told MSPs today.
Jim McColl described claims about the yard's shortcomings as "absolutely scandalous". Picture: SNSJim McColl described claims about the yard's shortcomings as "absolutely scandalous". Picture: SNS
Jim McColl described claims about the yard's shortcomings as "absolutely scandalous". Picture: SNS

The businessman called for a public inquiry into the botched ferries fiasco, which was backed by the Scottish Conservatives.

He said those involved should be "under oath" and that he felt "shafted" by the Scottish Government.

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Mr McColl said the Port Glasgow yard had not settled on a price with CalMac ferries owner Caledonian Maritime Assets Limited (Cmal) when the contract was announced.

The partially-built Glen Sannox ferry at the Ferguson yard. Picture: John DevlinThe partially-built Glen Sannox ferry at the Ferguson yard. Picture: John Devlin
The partially-built Glen Sannox ferry at the Ferguson yard. Picture: John Devlin

Mr McColl said Cmal was trying to negotiate the cost down from Ferguson Marine's offer of around £105 million to £97m, which was later agreed.

He told an inquiry into the contract by the Scottish Parliament's connectivity committee: "Before we agreed the negotiation, the First Minister had announced we had been selected as preferred bidders and the price was £97 million."

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"Cmal then came back to us and said 'it's been announced by the First Minister, you'll just have to accept it'."

Mr McColl added: "We were told because it was publicly announced, we were stuck with it.

"We were prepared to take a small hit to have the contract as a good reference."

But he said the firm was "a bit annoyed" because Cmal had agreed verbally to cover the cost of foreign exchange in buying materials, but it then said that couldn't be honoured because of the £97m contract announcement.

The committee's inquiry was triggered by problems with the contract which has led to the cost of the Glen Sannox and a second, unnamed ferry more than doubling to an estimated £230m and their completion being delayed by three years until 2022.

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The Scottish Government took over the yard last August after it went into administration.

Mr McColl also told the committee that claims about the yard's shortcomings in handling the contract were "absolutely scandalous".

Tim Hair, who was appointed by the Scottish Government last year as the turnaround director for the yard, had said its internal processes "have generally been found to be poor or non-existent to control a project of this magnitude".

Mr McColl also said finance secretary Derek Mackay blaming mismanagement by yard bosses for the overspend and delays was "defamatory" and "nonsense".

He said: "It's outrageous what's been said."

Mr McColl said Cmal had repeatedly refused to discuss changes to the contract.

He said: "I had to make a personal appeal to the First Minister to get them round the table."

He said Cmal chief executive Kevin Hobbs had asked him to retract an estimate of £14.7m of extra costs because of design changes.

Mr McColl said he had he had always found Mr Hobbs very civil face-to-face, but said he became entrenched in email correspondence.

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He said: "There was no accountability on the other side of the table and everything was down to Ferguson.

"If we had ironed it out, we would not be sitting here [at the committee] today."

He said Cmal should not be involved in ordering new ferries.

He said: "We don't need Cmal to be there.

"Before, it worked perfectly well with CalMac.

"It is surplus to requirements."

Mr McColl said CalMac "knew what they wanted" and had in the past consulted with island communities and engaged consultants to design ferries.

He said: "There is no need for anything more complicated.

"This should be going to a public inquiry.

"This is a mess that's not going to get any better."

Scottish Liberal Democrat transport spokesman and committee member Mike Rumbles said after the meeting:

“Jim McColl’s evidence to the committee was astonishing.

“There was a problem with this contract right from the outset.

"The First Minister undermined it by being more interested in PR gloss than setting the project out on the right footing.

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“Hundreds of millions of pounds of public money is the cost of Scottish Government incompetence.

“This project is running years behind schedule, communities aren’t getting the boats [ships] they were promised and there are now serious questions about whether they ever will.”

Scottish Conservatives transport spokesman and fellow committee member Jamie Greene said: “SNP ministers from the First Minister down are mired in this shambles.

“The taxpayer is out of pocket to the tune of £230 million, no new ferries have been delivered for our island communities, and now the SNP is doing everything it can to cover up this scandal.

“This goes straight to the top of the SNP Government and the time for apologies has long past.

“The First Minister, her finance secretary and a raft of SNP ministers must be properly held to account over their gross incompetence and negligence.

“Jim McColl is right in demanding that only a full public inquiry, with witnesses giving evidence under oath, will unearth why hundreds of millions of pounds of public money has been so badly mishandled by the SNP.”

Mr Hobbs said later: “We look forward to our opportunity to speak to the committee later this month to address serious inaccuracies that have been heard so far.

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"In particular, we will address issues around what are being referred to as “design changes” and the mediation and arbitration process.

“The previous senior management team at the shipyard failed to understand what the dual-fuel ferry contracts required and they failed to deliver.

"The management team got the specification requirements wrong many, many times and resulting mistakes had to be rectified.

"The shipyard began building at risk - cutting and fabricating steel and building sections without sign-off by Cmal, the Maritime Coastguard Agency and the classification society, Lloyds.

"Therefore, work had to be re-done.

"We did everything we could to assist the shipyard within the terms of the contract.

"The contract includes terms for mediation and resolution, however there was no contractual or technical basis for the compensation claim submitted by Ferguson Marine Engineering Limited (Fmel), and the terms of mediation put forward by Fmel were outside the contract.

"They wanted us to negotiate on a commercial basis.

"As a public body and custodians of taxpayer’s money, we are in no position to enter non-contractual negotiations, and to make unsubstantiated, ex-gratia payments.

“The initial claim in July 2017 of £17.5m rose to £66m by August 2018, none of which was backed technically or contractually.

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"As a consequence, Cmal was advised by our legal representation to follow any face-to-face meeting with a letter -in other words, on pre-litigation footing.

Fmel did not react well because they knew all along any claim had no merit in the contract and could not be defended.

"They seemed to believe that Cmal would capitulate under pressure.

"We could not and did not.

“All Cmal ever wanted to do was deliver two vessels to island communities.

"We are deeply saddened and frustrated with the current situation.

"We will work closely with the new Ferguson’s team to make this happen as quickly as possible.”