SNP pressed ahead with Ferguson Marine ferries contract despite experts’ ‘severe misgivings’ – Audit Scotland

Ministers awarded a major CalMac ferries contract to Ferguson Marine despite the "severe misgivings" of their ship owners and "significant risks" over the yard's inability to provide financial guarantees, Audit Scotland has concluded.

The highly critical results of an investigation by the public spending watchdog also found major problems remain unresolved at the Port Glasgow firm, including "significant operational failures" and further remedial work still to be addressed.

It said the two ferries still under construction were now nearly four years late “with no certainty on when they will be complete”.

Audit Scotland said their final cost was now estimated to be at least £240 million – two and a half times over budget – although the Scottish Conservatives said it could reach £400m.

The Ferguson Marine with the Glen Sanox docked.

Auditor General Stephen Boyle said: “The failure to deliver these two ferries, on time and on budget, exposes a multitude of failings.

"A lack of transparent decision-making, a lack of project oversight, and no clear understanding of what significant sums of public money have achieved.

"And crucially, communities still don’t have the lifeline ferries they were promised years ago.”

He warned that lessons must be learned to prevent the problems being repeated in future ferry orders.

The report’s conclusions call into question the Scottish Government’s decision to go ahead with the order against expert advice and its handling of the contract, including making loans of £45m to the yard before nationalising it to prevent collapse.

The Scottish Conservatives described the findings as “absolutely damning” and said they had uncovered an “embarrassing fiasco”.

The party will seek to pile on the pressure on ministers by leading a ferries debate in the Scottish Parliament on Wednesday, while Holyrood’s public audit committee has pledged to explore the report’s findings with the Auditor General “in detail” within weeks.

The major delay in completing Glen Sannox for the main Arran route and its unnamed sister ferry for the Skye-Harris-North Uist triangle, which should have been delivered in 2018, has exacerbated the unreliability of CalMac’s ageing fleet, several of which have suffered major breakdowns.

The report said: "These issues have frustrated island communities and weakened resilience across Scotland’s ferry network.”

Audit Scotland said ministers approved awarding the contract to Ferguson Marne in 2015 despite the yard being unable to provide “mandatory refund guarantees” for the financial risk to Caledonian Maritime Assets Limited (CMal), the Scottish Government firm which owns CalMac’s ferries.

The report stated the CMal board “considered that there were too many risks involved to award the contract” and told Transport Scotland it would prefer not to award the contract to the yard and to start the procurement process again.

Transport Scotland said Scottish ministers “were aware of the risks but were content to proceed to contract award”, but Audit Scotland was unable to find evidence justifying this, and said “there should have been a proper record of this important decision”.

The Scottish Government declined to comment on this finding.

As delays and cost overruns increased, Audit Scotland said a dispute over the contract between the yard and CMal escalated, which led to the Scottish Government taking over the site in 2019.

Scottish Conservatives transport spokesperson Graham Simpson said: “This report is absolutely damning of the SNP’s overwhelming failures on Scotland’s ferry network.

"Ministers have presided over an embarrassing fiasco year after year and it is our island communities who have been left abandoned.”

Scottish Labour transport spokesperson Neil Bibby said: “This is a damning report and ultimate responsibility for this nine-figure fiasco lies squarely with the SNP Government.

“Their relentless incompetence has left island communities waiting years for new lifeline ferries, taxpayers picking up an ever-growing bill, and Scottish shipyard workers fixing problems they didn’t create."

Scottish Liberal Democrat economy spokesperson Willie Rennie said: "This report places the blame for seven years of ferry failures squarely in the hands of SNP ministers."

However, Economy Secretary Kate Forbes sought to focus on the Scottish Government actions to protect Ferguson Marine from closure which had “saved two lifeline vessels, secured a viable future for commercial shipbuilding on the Clyde and protected over 300 jobs”.

She said: “The procurement process for vessels 801 and 802 [code names for the ferries] was undertaken thoroughly, in good faith and following appropriate due diligence, and suggestions to the contrary are wrong.”

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