Scots firms get nothing from £220m ferry deals given to Turkey

It has emerged that Caledonian Maritime Assets Ltd (CMAL), the Scottish Government-owned firm which owns and procures ferries and harbours failed to stipulate that there should be any Scottish benefit from the £220m contracts given to Turkish shipyard Cemre Marin Endustri.

It can be revealed that as Turkey landed a second £115m contract earlier this year to build two ferries for longsuffering islanders in a bid to shore up the nation's ageing ferry fleet, the only Scottish benefit stipulated was that an unspecified number of Scottish apprentices would get an unspecified period on attachment at the Turkish yard.

The community benefit of the first £105m contract award for two ferries was that up to three Scottish apprentices would gain one week's work experience at the Cemre shipyard every year over the course of the three year build and a total of £30,000 to its fund to support projects across Scotland.

READ MORE: 'It shouldn't be relied on': 40-year-old CalMac ferry makes a return

As of March 31, of the 58 companies providing products or services for ferries being built in Turkey - all are from overseas or based in England.

Details of the lack of Scottish input has produced a new wave of anger over how vital vessels are being procured as it emerged that CMAL chief executive Kevin Hobbs and its director of vessels Jim Anderson are to attend a £1000-a-night ferry conference cruise 'junket' on the Med next week in the midst of the nation's ferry fiasco.

It comes amidst a series of breakdowns of ferries owned by CMAL and operated by Scottish Government-owned CalMac while two long-delayed lifeline vessels being built by sister shipyard firm Ferguson Marine remain incomplete with delays of over five years and costs quadrupling.

The previous Ferguson Marine owner, tycoon Jim McColl, who rescued the yard when it went bust in 2014, blamed repeated design changes by CMAL which owns ferries for the issues in building the vessels for operator CalMac, which is also publicly-owned. CMAL blamed the shipyard firm.

Ministers and CMAL have been condemned for the lack of community benefits which are defined in the ground-breaking Procurement Reform (Scotland) Act 2014 as a "contractual requirement" relating to training and recruitment and the availability of sub-contracting opportunities.

The Scottish Government in its commentary on the Act said: "Community benefits have contributed to a range of national and local outcomes relating to employability, skills and tackling inequalities by focusing on under-represented groups. The Act aims to achieve the maximum use of these requirements in public procurement."

CMAL had rejected a bid at the first questionnaire hurdle in the first two ferry project from state-controlled Ferguson Marine.

The ground-breaking Procurement Reform (Scotland) Act 2014 when it was brought in was seen by many as a welcome move away from contracts awarded only on the basis of the lowest price towards those which offer the best long-term outcomes for Scotland’s communities and the environment.

Public contracts valued at £4m or above have specific requirements in relation to community benefits in the authority area that a contract is issued.

These should include training and recruitment, the availability of sub-contracting and supplier opportunities, and that it is intended to improve the economic, social or environmental well-being of the area.

READ MORE: 'Catastrophic': Island 'inaccessible' claim after  70 per cent ferry fare rise

If no community benefits are sought in a contract, a statement must be published justifying the decision.

CMAL deny that there is a breach of procurement laws saying there was no legal requirement to consider community benefits.

Cemre Marin Endustri shipyard with (inset) what one of the new Islay vessels could look like

And they say that the Public Contracts (Scotland) Regulations requires contractors to treat economic operators "equally and without discrimination, and restricts CMAL from artificially narrowing competition by unduly favouring or disadvantaging any particular economic operator".

They said that to narrow the supply base to a particular location like Scotland could be construed as "favouring manufacturers, particularly as there is a limited supply base in Scotland, leading to potential challenge".

There has been concern that the first two ferries being built were using steel sourced in China.

According to Scottish Government details of 58 companies said to be supporting the Scots ferries' build, 40 as of the end of last month had signed agreements with the remaining 18 due to obtain approvals as the shipyard build programme progresses.

Of the contractors, just one has any Scottish connection.

Norway-based Kongsberg have an agreement in place with Cemre Marin Endustri for 50 retractable fin stabilisers for the first two vessels. They have a production facility based in Dunfermline.

READ MORE: Anger as CMAL sends execs on £1000-a-night Med conference cruise

The ex-leader of the SNP group on Inverclyde Council and now Alba Party's general secretary Chris McEleny said he believed that the ministers and CMAL had broken the law.

He said: "They have failed to act according to the legislation. There is no community benefit from these contracts. It is a total scandal, it is clear to me that it is unlawful and a slap in the face of the legacy of Clyde shipbuilding.

"The Scottish Government focus should be on keeping work in Scotland. If they want a court battle, they should concentrate on that.

"It is total mismanagement. CMAL are out of control. They are on jollies and now have awarded contracts without benefits to Scotland."

Highlands and Islands MSP Edward Mountain, the former convenor of the rural economy and connectivity committee whose probe into the construction of the ferries for CalMac branded the management process a "catastrophic failure" said the contracts failure was "yet another damning indictment of how the SNP are undermining Scotland’s commercial shipbuilding industry".

He said: “It’s already embarrassing enough for the SNP that the next ferries are being built abroad. However, this revelation is a further disappointment as it appears Scottish firms will be missing out on supplying services or materials for the construction of new ferries in Turkey too.

“Everyone wants to see Scotland’s commercial shipbuilding sector thrive again, but that’s clearly not happening under the SNP who continue in their failure to deliver vessels 801 and 802.

“Our islanders are desperate for new ferries. I just hope the ones being built in Turkey arrive on time and on budget.”

In the initial two ferries contract award, CMAL had invited four overseas companies to bid to build the two vessels bound for Islay - and excluded Ferguson Marine.

Scottish Government-controlled Ferguson Marine, failed to get past the first Pre Qualification Questionnaire hurdle in the Islay ferries contract.

The award to Turkey was described by Scottish Conservative shadow transport minister Graham Simpson as "an embarrassment for the SNP".

Ferguson Marine which runs the last remaining shipyard on the lower Clyde was nationalised after it financially collapsed in August 2019, amid soaring costs and delays to the construction of two lifeline island ferries.

In a response to initial concerns about community benefits to Scotland, CMAL's head of business support CMAL's head of business support Brian Fulton said in a letter last year that the request for community benefits had only been "advisory".

In 2016 Nicola Sturgeon featured in a 'Standing up for Scotland' video at Ferguson Marine. Source: SNP

Transport Minister Kevin Stewart said: “The Scottish Government is committed to commissioning new ferries to support our island communities, and it’s encouraging to see progress on bringing these vessels into service on time and budget. The Islay ferry routes are some of the busiest services for freight on the west coast and the new vessels will help to grow the island’s economy, as well as bringing added resilience to the wider network.

“In line with relevant procurement legislation, an open tendering process was led by CMAL as the procuring authority. The bid received from this yard represented the best value for money in terms of quality and price. "The contract awarded by CMAL is a standard international shipbuilding contract and as such the decision regarding materials and equipment lies with the shipyard.”

A spokesperson from CMAL said: “No UK yards passed the SPDS [Single Procurement Document Scotland] questionnaire stage of the procurement process for the first two vessel contracts awarded to Cemre, therefore no UK bids were subsequently received.

“CMAL received no bids from any UK yards for the second two vessel contracts.

“The Procurement Reform (Scotland) Act 2014 does not legally require community benefits to be included in contracts. However, CEMRE has committed a £30,000 donation to CMAL’s CSR fund, which has already supported 14 initiatives across Scotland, as well as an offer of an internship programme for up to 10 students during the period where the vessels are under construction.

“Throughout the build of the four vessels, port enabling works will take place at Port Askaig, Colonsay, Port Ellen and Kennacraig, all of which will provide jobs and better facilities for communities in these areas. And of course, when complete, the new vessels require maintenance over the course of their lifetime, which will be provided by both Scottish and UK yards.”