SCOTTISH Government-owned Ferguson Marine has awarded a £777,550 contract to a Scots firm without going out to tender to resolve the fiasco over the delivery of two new lifeline ferries.

The taxpayer-funded award has been made to Kirkintilloch-based Alliance Project Controls Ltd to supervise the construction work of the unfinished ferries at Scotland's last civil shipyard.

Ferguson shipyard won the £97m contract to build two new ferries for Arran and the Hebrides in 2015.

The ships were to be a new hybrid design - powered by marine diesel oil and liquefied natural gas - but construction fell way behind schedule.

One of the ferries, MV Glenn Sannox – which is destined for the Arran-Ardrossan route – was due to enter service in the summer of 2018, but construction delays meant that was put back.


The second vessel, known as Hull 802, was supposed to be delivered to CalMac in the autumn of 2018 for use on the Uig-Lochmaddy-Tarbert triangle, but that has also been held up.

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Last summer the yard collapsed owing more than £49m to the Scottish government, and it was eventually taken into public ownership.

It has led to a war of words between former Ferguson owner, tycoon Jim McColl, the Scottish government and Caledonian Maritime Assets Ltd (CMAL), the taxpayer-funded company which owns and procures ferries.

It has also raised concerns about the nation's ferry procurement process now ensconced within four levels of Scottish Government-controlled bodies - CMAL, Ferguson Marine as ferry builders, Transport Scotland as funders, and ferry operators CalMac.

In February, the Competition and Markets Authority watchdog warned of the dangers of government-owned Ferguson Marine being awarded work without a competitive tender process, saying “it is unlikely to make it a commercially sustainable business” and “it may also have a negative impact on the wider industry”.

That came as the Scottish Government faced questions about failing to notify the EU about nationalising Ferguson Marine Engineering Limited (FMEL) after being found to have given £50m of "illegal state aid" to two airports.

Illegal state aid was found to have been made to Sumburgh Airport on Shetland and Inverness Airport after both received taxpayer support that had not been approved by the European Commission.


The EU has previously confirmed it was not notified of the state takeover or the issuing of two commercial loans to FMEL in Port Glasgow totalling £45m before the yard fell into administration and then public ownership.

Contract award details reveal that it was made without prior publication for a "call for competition" in the Official Journal of the European Union.

The justification given for avoiding going for tender given as: "Extreme urgency brought about by events unforeseeable for the contracting authority..."

It said the project manager were originally contracted when Ferguson Marine were in administration and that "this is therefore a continuation of that contract".

READ MORE: Law Society of Scotland issues state aid warning to government over ferries fiasco

The details briefing continued: "The services offered by the supplier were identified as key requirement to get the planning of a detailed build programme for the vessels and create a schedule that would allow the ships to be built in the shortest time possible."

It said the contract was awarded in accordance with Public Contracts (Scotland) Regulation 33.1 (ii) on the basis that there is "now a body of knowledge and understanding built up by the supplier that cannot be readily transferred within a reasonable timescale".

The Herald previously revealed concerns by the Competition and Markets Authority about the "potential risks" of state control over the ways are operated, run and paid for in Scotland.

Glen Sannox was 'launched' on  November 21, 2017 by the First Minister Nicola Sturgeon

It said it would be "happy to engage" with the Scottish Government to help develop its thinking on how to procure goods and services while fostering competition across the sector.

The watchdog, which has responsibility for investigating entire markets if they think there are competition or consumer problems, had warned the events over the stricken ferry procurement process may have a "chilling effect" on future procurement "if a sufficient number of suppliers do not wish to participate".

And it suggested the Scottish Government move quickly after the current ferry procurement process is complete, to indicate that there "will be a focus on designing future procurement of ferries (and ferry services) that enables effective competition and encourages broad participation..."

In March, last year, FMEL said the costs to build the ferries had soared from £97m to over £195m. Now the former management believe that that has now soared to over £300m.

The Scottish Government said: "The supplier was originally contracted while Ferguson Marine were in administration, this is therefore a continuation of that contract.

"The services offered by the supplier were identified as key requirement to get the planning of a detailed build programme for the vessels and create a schedule that would allow the ships to be built in the shortest time possible. 

"The Turnaround Director’s report identified “an absence of project planning and control” as one of the key issues at Ferguson."