Why did ScotGov support award of Scots ferry contracts to firms abroad

The Herald Scotland

3 days ago

MV Isle of Islay is expected to be taking passengers in Scotland nine months before MV Glen Rosa that is still being completed by state-owned shipyard firm Ferguson Marine.
It has been confirmed successful sea trials mean that MV Isle of Islay - one of the first of the four ferries being built in Turkey in the wake of Scotland's ferry fiasco - is on target to be delivered by September.
But there are now concerns that Scots companies have lost out in playing any part in making any contribution to the building of 11 new lifeline vessels to serve the nation's islands as part of a Scottish Government plan to help end the nation's ferry fiasco.
Why did CMAL award ferry contracts to shipyards in Turkey and Poland?
The Scottish Government-owned ferry and port owner CMAL awarded contracts to build ferries to Cemre Shipyard in Turkey and Remontowa Shipbuilding in Poland based on competitive procurement processes. These shipyards demonstrated the capability to deliver vessels that met technical specifications, timelines, and budgetary constraints.
The Cemre yard and (inset) one of the vessels it is delivering for Scotland (Image: .) Remontowa was awarded a £147.5m contract to build seven all-electric ferries, having received the highest score during the bidding process.
The Turkish shipyard Cemre Marin Endustri was contracted to construct four new roll-on/roll-off passenger and vehicle ferries for Scotland's west coast ferry network. These vessels are intended to enhance services on routes to the Isle of Islay and the Little Minch corridor, which includes Skye, Harris, and North Uist. The deals together were worth £206m.
Why was Ferguson Marine, the Scots state-owned shipyard firm not awarded these contracts?
The Inverclyde firm had faced several challenges that affected its competitiveness in the bidding process.
Firstly a lack of experience. The shipyard had not completed any ferries in the past five years, failing to meet the tender's requirement to show recent experience in building at least three similar ferries.
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It had financial and operational issues. Ferguson Marine's previous projects, such as the Glen Sannox and Glen Rosa, have been significantly delayed and over budget, raising concerns about the yard's financial stability and project management capabilities.
CMAL's procurement process emphasised technical and financial suitability. Ferguson Marine is understood to have not scored as highly as other bidders in these areas.
What were the issues with the Glen Sannox and Glen Rosa projects?
The issues with Glen Sannox and Glen Rosa has become known as Scotland's ferry fiasco.
Glen Rosa and Glen Sannox's arrival to serve islands was scheduled to be online in the first half of 2018. Glen Sannox finally went into service on January but islanders are still awaiting the arrival of Glen Rosa.
Glen Sannox (Image: Andrew Milligan/PA) Both vessels were significantly behind schedule and over budget. Glen Rosa's delivery has been delayed until spring 2026, with costs soaring.
Costs of the entire project are currently expected to have multiplied at least five-fold from the original £96m price.
The delays were down to design and construction flaws. Problems included inadequate planning, quality issues, and a lack of detailed construction plans with CMAL and Ferguson Marine blaming each other for failings.
The contract also lacked adequate financial safeguards, such as a builder's refund guarantee, which would have protected public funds in case of project failures.
What are the implications of awarding contracts to overseas shipyards?
Awarding contracts to overseas shipyards has both advantages and disadvantages.
Overseas shipyards like Cemre and Remontowa, it is felt, have demonstrated the ability to deliver vessels on time and within budget.
These shipyards have experience building similar vessels, ensuring adherence to technical specifications.
But the disadvantages are the economic impact on Scotland.
Excluding domestic shipyards like Ferguson Marine can have negative effects on local employment and the Scottish shipbuilding industry.
Ferguson Marine has previously indicated that losing ferry contracts had an effect on its ability to continue as a going concern.
Ferguson Marine (Image: Colin Mearns) The decisions on the contracts have sparked political criticism and debates over the government's commitment to supporting domestic industries.
What lessons have been learned from these experiences?
While the decision to award ferry contracts to overseas shipyards was based on factors like cost, efficiency, and technical capability, it has raised important questions about the future of domestic shipbuilding in Scotland and the need for improved procurement practices.
The challenges faced in ferry procurement have highlighted the need for robust procurement processes and that contracts should include builder's refund guarantees to protect public funds.
It has also shown the requirement to balance the need for cost-effective procurement with the importance of supporting local industries.