New £3.9 billion CalMac contract hailed as 'catalyst for positive change'

CalMac will be required to improve services for islanders after being awarded a new ten-year contract by ministers to run Scotland’s west coast ferries.

Transport Secretary Fiona Hyslop said she expected the decision announced on Thursday to be a “catalyst for positive change across the Clyde and Hebrides network”.

Glen Sannox is due to be followed by 11 more new ferries | John Devlin/The Scotsman

The £3.9 billion contract from October will include new performance targets, greater scrutiny of how CalMac is operating and more involvement from people who use the ferries.

The move confirms Ms Hyslop’s intention two years ago to directly award the contract to the Scottish Government-owned operator rather than hold a contest like in the past.

Past Serco challenge to CalMac failed

CalMac won its previous eight-year contract worth £900 million in 2016 after sole rival Serco’s bid was ruled non-compliant. The contract was subsequently extended by a year while a direct award was considered.

Ms Hyslop said: “This direct award fundamentally changes the ethos of the service by shifting from a commercial arrangement to a model more focused on the delivery of a public service engaged on the particular needs of the communities it serves.

“I fully expect the direct award to be a catalyst for positive change across the Clyde and Hebrides network, based on a more efficient, flexible model of delivery that fully reflects community interests.”

The Cabinet secretary said improvements would include a “benefits realisation plan, new and revised key performance indicators, enhanced monitoring and reporting, greater regionalisation through dedicated area managers and increased stakeholder engagement”.

Filling managers’ gaps ‘crucial’

CalMac chief executive Duncan Mackison told The Scotsman in August last year it was recruiting nine new area managers to improve communications with passengers after staff cutbacks left islanders feeling their concerns were not being heard.

CalMac chief executive Duncan Mackison made plugging the gap in area managers a priority | John Devlin/The Scotsman

He said that was crucial to enable the company to secure the new contract.

Mr Mackison said on Thursday: "Everyone at CalMac is committed to delivering a resilient, flexible ferry service which is tailored to the needs of the diverse and vibrant island communities we serve.

“We will play a leading role in contributing to the prosperity of islands on Scotland’s west coast, with the approach of delivering a public service rather than a commercial contract.

“During the extension period for the current contract, we recognised the need for change and are already driving change through the expansion of local teams, enhanced community engagement and improved responsiveness to local requirements.”

Ms Hyslop hopes CalMac’s operations will be significantly improved with its 12 new ferries on order, including Glen Rosa, sister vessel to Glen Sannox, which entered service on the main Arran route in January.

Four ferries are being built in Turkey for Islay and the Harris-North Uist-Skye routes, and seven smaller electric ferries in Poland for several shorter links.

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Scottish Conservatives transport spokesperson Sue Webber said: “While this announcement provides continuity, the bottom line is CalMac will continue to carry the can for the SNP’s dire mismanagement of the ferry network.

“Islanders have been betrayed by the SNP time and time again, and any ferry provider is only as good as the fleet it has to work with.”

West Scotland Scottish Liberal Democrat MSP Jamie Greene said: "The big concern people have with this direct award is that without a competitive tender process, there is no way to hold the incumbent operator to account on its many promises to improve services.”

Eddie Dempsey, general secretary of the Rail, Maritime and Transport union, which represents many CalMac staff, said: "This is a tremendous victory, not just for our members on CalMac ferries, but also for the island communities who are best served by lifeline ferries that are in public ownership.

"The Scottish Government has made the right decision and now the union will work with all stakeholders to ensure that CalMac ferries are affordable, well resourced and reward seafarers properly for their work."

However, the GMB union, which represents workers at the Scottish Government-owned Ferguson Marine, questioned why the yard had not also been directly awarded a contract - for seven CalMac electric ferries last year, known as the Small Vessel Replacement Programme (SVRP).

Deputy First Minister Kate Forbes has said that could have delayed construction by triggering legal wrangles.

GMB Scotland secretary Louise Gilmour said: “We were told repeatedly how there are legal obstacles, but these are insurmountable when convenient for ministers and dissolve when not.”

However, a Transport Scotland spokesperson said: “Direct award of public contracts is only possible in strictly limited circumstances under public procurement rules.

“Shipbuilding is a competitive global market and a designated sensitive sector under the UK Subsidy Control Act.

“Any direct award of a public contract must comply with the Act and must be capable of withstanding legal challenge.

“Ministers will consider future vessel contracts from public agencies, including the SVRP phase two, at an appropriate time and on a case-by-case basis to determine whether any might legally be open to direct award.”