Swinney fails to commit to reconsider CalMac ferry contract award plan

The direct award without going through a competitive tendering process to state-owned ferry operator CalMac is the preferred option for the next contract over the future of lifeline ferry services.

CalMac's current £975m eight-year Clyde and Hebrides Ferry Services contract expires in September 2024. It had previously won the contract for six years in 2007 – after ministers were forced to tender for routes to satisfy European competition rules.

There is concern that the plan to give CalMac the permanent right to run services has not been a feature of the written consultation and some have argued that there must be a separate public discussion over the proposal.

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A final decision after a due diligence process – which will establish the feasibility of that approach from a financial, operational and legal perspective – is expected in the summer, with an aim to have the new arrangement in place by October 1 next year.

But the Ferries Community Board, formed as part of CalMac's franchise bid for the Clyde and Hebrides Ferry Service to be the voice of the communities, is opposed to the move.

It has said that in response to the ferry service inquiry by the Scottish Parliament's transport committee, communities represented "unanimously" do not support a direct award of the next contract.

The ferries community board has said that to gain community support for a long term directly awarded contract, they would need to see "significant change in the structure organisation and culture of the management and operation of the ferry services".

It says it would want to see a "radical overhaul" of the contract itself with "revised measures of success and far greater accountabilities" to the communities served by the ferry services in Scotland.

The First Minister John Swinney declined to directly answer whether he would reconsider the position over the direct award in the light of the views of islanders, after being questioned by Edward Mountain, the convener of the transport committee.

Mr Mountain said the direct award move is in "direct contravention of what islanders wanted" and added: "Would the First Minister reconsider the decision to give this contract to a company whose parent company made a profit from delivering poor services in 2022/23 and would be against the wishes of the islanders."

Mr Swinney said: "We listen carefully to the views of island communities and we will continue to do so, I give that assurance. As a regular user of the ferry services which I am and they are very precious to me, I will listen carefully to the views of not just my transport secretary, but also islanders, to understand the need for them to have access to a high quality service that will meet their needs for residents and businesses and to accommodate visitors accessing our islanders."

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He was asked if he shared the view that the voices and views of islanders and other ferry dependent communities must be central to the process, which is why it is vitally important that the Scottish Government takes the required time to study responses to the consultation.

Mr Swinney said: "It is essential as also as the dialogue with the Ferries Community Board who shape significantly the dialogue that the government takes forward on these important questions and I give the assurance that we will take the necessary time to ensure that all of these issues are properly explored before final decisions are taken."

He said that the update on the procurement route would be given before the summer recess which will "provide the clarity" for islanders.

Angus Campbell, chairman of the Ferries Communities Board, told ministers that to make future contract and organisational changes work "we must change the culture of the bodies involved in delivering ferry services".

The analysis said that it was felt that CalMac and ferries and ports and harbours owner Caledonian Maritime Assets Limited should be scrapped and merged into one body to become more efficient and produce financial savings as part of a revolutionary culture change in the way lifeline services are provided by ferries.

The overview of a series of consultation meetings produced by the Ferries Community Board for the Scottish Government says that a strong case has been made for including the ferries division of the Transport Scotland agency into the new body.

The Scottish Government has previously said that a direct award should be a "catalyst for change" with a new management culture emerging, "one that is more supportive of the community's customers and passengers served by the network".

One advantage cited for a direct contract is a saving on the tender process. The Scottish Government has estimated that the costs of tendering the 2016 to 2024 contract was £1.1m. But that included a £439,000 bill for consultancy support.

But public spending auditors which were critical of the process said bidders had told them that their costs were increased due to delays during the project.

Transport Scotland officials have been examining how to make a direct award to CalMac without leaving itself open to legal challenges through a breach of the UK's version of the state aid rules.

Ministers have been taxed with the vexed question of unlawful state aid since being found guilty of doing just that in relation to two airports.

Under EU rules, member-state governments are expected to notify the European Commission – which is in charge of treaty compliance – about proposed state aid moves.

Now that the UK is out of the EU, the procurement principles that exist in Scotland are still derived from EU law.

The government had considered two contractual arrangements to ensure continued operation of these services at the end of the current contract.

The exemption removes the legal obligation on a public authority to tender public contracts when it can be proven that the public authority can provide the services itself, subject to certain ‘control’ and tests.