Procurement of new Arran ferry was a ‘catastrophic’ failure, inquiry finds

A Holyrood committee says the contracts for two new ferries from Ferguson Marine was “a catastrophic failure.”

The yard was due to deliver the ships to be used for Arran in North Ayrshire and the Hebrides by 2018 at a cost of £97 million.

MSPs were told last year by then-finance secretary Derek Mackay that “mismanagement'' by the Port Glasgow shipyard led to delays and overspends.

The vessels are expected to be delivered by 2022 and 2023 at almost double the original cost.

An extensive inquiry by the Rural Economy and Connectivity Committee at Holyrood said the procurement process was “not fit for purpose'' and called for an “independent external review'' to take place.

Throughout the inquiry, witnesses spoke of a project fraught with problems, including a breakdown in the relationship between Ferguson and Caledonian Maritime Assets Limited (CMAL), the Scottish Government-backed procurement body.

In a 129-page report released on Wednesday, the committee said the Scottish Government was too willing to press ahead with the project despite the risks involved and stated CMAL and Transport Scotland's due diligence was “inadequate''.

It concluded: “Based on the extensive range of evidence it has received, the committee believes that there has been a catastrophic failure in the management of the procurement of vessels 801 and 802, leading it to conclude that these processes and structures are no longer fit for purpose.

“The committee therefore calls on the Scottish Government to commission an independent external review of the processes for public procurement of ferries to ensure appropriate lessons are learned for the future and to keep the Committee updated of its progress and conclusions.''

The committee also found “strong evidence'' to suggest Ferguson Marine continued to build the ships incorrectly to ensure it would receive “milestone payments'' that CMAL was legally obliged to give it after completion of certain stages of the project.

The report said: “The committee has been appalled to learn that CMAL was legally bound to continue to make milestone payments on the ferries contract despite ongoing concerns about the performance of the contractor.

“The committee also questions why CMAL continued to make milestone payments in a situation where the sign-off of the basic design of the vessels had not been secured from class or flag.

“Furthermore, there is strong evidence that the contractor deliberately proceeded to construct specific sections of the vessel either out of sequence or not according to the proper specification purely as a means of triggering milestone payments on the contract.''

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