Ministers to blame on ferry contract, says KC

​Barry Smith KC’s report concludes: “It is the singular feature of the period under consideration that the CMAL Board did not wish to award the contracts to FMEL absent full coverage guarantees and that the Scottish Ministers intervened”.

The ferries, one originally destined for Uig-Tarbert-Lochmaddy, are now six years behind schedule with costs quadrupling to over £400 million.

Mr Smith was asked to investigate after a BBC Scotland programme claimed the contract had been “rigged’ in favour of Ferguson. The programme made no allegation of “fraud” which was the specific remit set for Mr Smith in spite of protests from the journalists responsible.

His report finds no evidence of individual or corporate “fraud” though since the “Disclosures” programme did not allege that, this does not come as a great surprise. However, Mr Smith does analyse the process which led to the contract award and pins responsibility firmly on Scottish Government Ministers and Transport Scotland.

In August 2015, he recalls, “the CEO of CMAL received a telephone call to report that TS had made contact to intimate that the First Minister (Sturgeon) “had approved” the contract and that a press conference would be held at Ferguson’s on 31 August.

“The CEO of CMAL reported back to TS the risks inherent in pre-empting matters in this way, prior to CMAL Board approval of the contract award, or indeed the procurement process being followed. This aspect of matters is politically charged.

“It is important to note, however, that CMAL formed the impression – as they had done in 2014 when Ferguson’s was purchased by (Jim McColl) – that the Scottish Ministers were determined that the contracts should go to Ferguson Marine”.

Despite the warnings, Ms Sturgeon went ahead with her press conference, presenting the contract as a fait accompli, describing it as an “excellent result” that “will see the 150 strong workforce retained and more staff taken on”.

Mr Smith writes: “At the time of that statement, no contract had been awarded by CMAL to FMEL and the issue of the BRG( Builders Refund Guarantee) became ever more contentious.

“The general consensus of the Board was that there are still too many risks involved around the refund guarantee matter which are still to be resolved and to that end the Board are not in a position to award the contract to FMEL at this stage”.

CMAL was eventually forced into awarding the contract to Ferguson’s by a Ministerial directive which absolved CMAL of liability.

Mr Smith notes that when he met the journalists behind the “Disclosures” programme, they “expressed surprise that my investigation would not consider the allegations made by the BBC that procurement rules were not followed and that the process had thereby been “rigged.” The journalists wished to stress that they had made no allegation of fraud”.

Kevin Hobbs, Chief Executive of CMAL said: “We welcome the findings of Barry Smith KC‘s independent investigation, which has established no evidence of fraud in the procurement of vessels 801 and 802.

“We do, however, recognise that the report identifies a number of missteps over the course of the procurement during 2014 and 2015, and mitigations have been in place for several years to ensure these do not happen again. For example, all parties involved in a CMAL competitive tender are required to sign a confidentiality agreement, and all clarification meetings with bidders are now carried out using the same method of communication.

“The KC’s report recognises the CMAL team at the time of this procurement as diligent, dedicated, hardworking individuals – which we stand by entirely. This is also true of current team, who are firmly focussed on the delivery of these vessels, working closely with Fergusons to ensure they enter service as soon as possible.”