ScotGov agrees to ten gagging clauses over ferry fiasco firm

Calls have been made for a full inquiry into the reasoning behind the decision-making on the vessels.

A Scottish Government due diligence review, supported by an analysis by consultants Teneo, said it would be cheaper to scrap the ship still being built at Ferguson Marine and place a new order elsewhere. It is understood the Teneo report is subject of a non-disclosure agreement.

The non-disclosure agreements (NDAs) revelation has emerged in a letter to MSPs by wellbeing economy secretary, Neil Gray, and seen by the Herald, which says that the NDAs are needed to protect commercial sensitivities and the interests of the taxpayer.

The TaxPayers' Alliance, which campaigns against public money wastage, said the NDAs "appeared to be unusual" and said people would be "shocked by the unusually aggressive nature of this cover up".

John O'Connell, chief executive of the Alliance said: "Scots will be fuming that they're being forced to pay for this cover up.

"Ministers appear far more keen to save their own skins than look out for the interests of taxpayers, amid a sorry saga of delays and cost overruns.

"Holyrood should pursue a policy of vigorous transparency whenever things go wrong."

READ MORE: ScotGov's delivery of new wave of ferries put back more than two years

Mr Gray gave a rare written authority to plough ahead with supporting the delivery of the two ferries at Ferguson Marine, saying it is the "platform upon which future success can be built".

He said that non-delivery of the ferries at nationalised Ferguson Marine (Port Glasgow) would put the very future of the yard and the jobs it supports "in jeopardy".

Scotland's lifeline services has been dogged with issues with the delivery of ferries Glen Sannox and Glen Rosa still not online after being due to be available for passengers in first half of 2018 when Ferguson Marine was under the control of tycoon Jim McColl. With both now due to serve Arran, they are getting on for six years late and the last estimates suggest the capital costs of delivery could have more than quadrupled from the original £97m cost.

The value for money study by consultants Teneo cost the taxpayer £620,000 but remains under wraps.

The extra public costs involved in going ahead with the second vessel against starting afresh continue not to be divulged, despite multiple requests, leading to fresh criticism over public accountability.

Also being kept secret is a report by consultants First Marine International (FMI) that was also considered into operations at Ferguson Marine as part of wider work to evaluate the shipyard’s productivity and which supported the analysis of proposals for continued investment.

The Scottish Government has said that disclosure would "impact on FMPG’s ability to compete for and win new business and thereby jeopardise the commercial future of the yard. It would also potentially compromise the commercial interests and intellectual property of our advisors".

The Scottish Government paid around £200,000 to FMI, a leading consultancy firm with specific expertise around shipyard competitiveness, to help turn around the yard’s fortunes that is being kept secret.

A separate analysis by FMI for Ferguson Marine for similar work, however, was subject of an NDA.

Both studies were being used by both Scottish Government and the state-owned shipyard firm yard to gauge future investment and improvements to the yard in a bid to ensure it can be competitive.

Now it has emerged that the Scottish Government has entered into ten NDAs with private companies over several years in relation to the FMPG.

In a written explanation to MSPs, Mr Gray states that "in each case" the NDAs "were necessary to protect commercial sensitivities of FMPG and the interests of the taxpayer, for example to enable the sharing of confidential information during a tendering process".

He added: "We will only use NDAs where appropriate and remain fundamentally committed to transparency and openness as regards our shareholding in FMPG..."

Highlands and Islands MSP Edward Mountain, convener of Holyrood's transport committee said that a full probe into what went on should be conducted.

The former convenor of the rural economy and connectivity committee which branded which branded the ferry fiasco management process a 'catastrophic failure' said: "I am unclear if Neil Gray was in possession of the full facts when he decided to ‘push on’ with building [Glen Rosa] when clearly it was going to be more expensive than building a new ferry.

"I believe we need a full inquiry into this as the full story needs to be aired."

A ferry user group official said that the "confusing and secrecy" around the financing of the ferries had "made the fiasco seem far more murkier".

He said: "I am bound to say that we would rather have the ferries serving islands now, not later, but the news I am hearing leaves me to believe there is a banana republic level of secrecy over all this.

"Breaking the secrecy that undoubtedly exists has got to be resolved and Audit Scotland and the Scottish Parliament should have full oversight of what is happening."

Mr Gray in a response to the Public Audit Committee which is scrutinising the cost of the ferries continued to block the publication of the financial rationale for continuing with Glen Rosa.

He had been asked to "reconsider what information can be made publicly available to demonstrate this commitment".

But Mr Gray said the information contained in the FMI and Teneo reports "cannot be made public". However, he did state that he remained committed to keep this under review "so that when, at some point in the future, some of the information in these reports is considered less commercially sensitive, it will be published in the interest of transparency and accountability".

The convener of the Scottish Parliament's public audit committee Richard Leonard has said that details of the financial reasoning for forging ahead must be made available.

He told Mr Gray that it was "in the public interest that the information is subject to parliamentary scrutiny" and added that the committee were "unconvinced" by the reasoning why information cannot be provided.

Mr Gray had said procuring a new vessel would mean it would not be delivered till May 2027 at the earliest and said that the value for money case for the second delayed vessel Glen Sannox had been met.

The extra £72m cash for Ferguson Marine for this financial year which began on April 1, had been under due diligence since September last year over concerns about the soaring costs of the two lifeline ferries.

The Scottish Government has previously come under fire for ferry secrecy by refusing to publish the full details of the full contract between Ferguson Marine and government-owned ferry owning and procurement agency Caledonian Maritime Assets Ltd (CMAL) into the building of the stricken vessels.

Tycoon Jim McColl, the former owner of Ferguson Marine – before it went into administration in August 2019 and nationalised by the Scottish Government – said it showed it was not a fixed price contract and he was entitled to ask for extra money to fulfil it.

Vital pages were removed from the document before they were finally published by the Scottish Government. These include crucial financial details about the contract, guarantees, payment details, permissible delays and cost liabilities.

The full contract was finally published by the Scottish Government in July, but only after Mr McColl submitted it to the public audit committee.

Mr Gray told the Herald “The Scottish Government remains committed to being as open and transparent as possible in relation to decisions around Ferguson Marine (FMPG) and the Glen Sannox and Glen Rosa.

“The director general economy wrote to the convenor of the Public Audit Committee, confirming the Scottish Government’s approach, however he also stated that disclosure of due diligence reports such as that compiled by Teneo would impact on FMPG’s ability to compete for and win new business. Therefore disclosure of the reports would jeopardise the commercial future of the shipyard.

“The Scottish Government has engaged fully in parliamentary and Audit Scotland scrutiny processes. Audit Scotland have been provided with ‘full access to officials and the documentation’ as set out in their report on 16 November 2023.”