CMAL CalMac ferry call on Scottish shipbuilder regrettable

It was certainly disappointing to learn that the procurement criteria for the replacement for Caledonian MacBrayne’s well-kent MV Lord of the Isles ferry effectively prevent Ferguson Marine from bidding for the contract.

There had been a bit of chatter – and not a small amount of hope - over quite a long period that there might be a direct award of the contract to build this vessel to the Port Glasgow yard.

Sadly, when details emerged last week about the procurement process for the new vessel, it was essentially the opposite scenario.

Not only would there be no direct award but one particular stipulation of Caledonian Maritime Assets Limited - which procures vessels for Caledonian MacBrayne and like the ferry operator and Ferguson Marine is owned by the Scottish Government - means the Port Glasgow yard cannot even be in the running.

The specific sticking point for Ferguson Marine is the CMAL requirement that bidders must have delivered at least two vessels longer than 75 metres in the last five years, not including ongoing projects.

Ferguson Marine has delivered the MV Glen Sannox for CalMac’s Arran route within this timeframe, albeit years late and greatly over budget.

However, delays to the delivery of the MV Glen Rosa, also for the Arran route, mean that the Port Glasgow yard does not meet the CMAL criterion. The Glen Rosa, for which the latest delay was announced last December, is now expected to be delivered in the final quarter of this year.

It was easy to understand the GMB trade union’s apparent exasperation last week when news of CMAL’s specifications for bidders - and the impact of these in ruling out Ferguson Marine - emerged.

GMB Scotland declared the refusal to allow “Scotland's publicly owned shipyard” to bid for the ferry contract “beggars belief” and must be reversed.

The trade union highlighted the fact that the Port Glasgow yard built the original Lord of the Isles in 1989.

And the GMB, which last year led a community-backed campaign urging ministers to make a direct award of the contract to replace the Lord of the Isles to Ferguson Marine, called on the board of CMAL “to halt the tendering process before justifying their decision to newly elected MSPs after the election next month”.

People might point to the unfortunate and huge delays and cost over-runs in Ferguson Marine’s building of the Glen Sannox and Glen Rosa in the context of the Lord of the Isles replacement.

However, in this context, we should not lose sight of the complexity of these vessels as a result of CMAL’s specifications for these dual-fuel ferries.

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And there was certainly much friction between CMAL and Ferguson Marine when it was owned by Jim McColl’s Clyde Blowers Capital before the Port Glasgow yard fell into administration and was nationalised by the Scottish Government in December 2019.

In any case, what is crucial when it comes to Ferguson Marine is to look ahead rather than behind us.

The GMB highlighted its belief last week that public procurement rules fail to ensure “the social and economic value to Scottish workers and their communities is properly valued in the tendering process before contracts are offshored”.

The social and economic value of awarding contracts to the Ferguson Marine yard is crystal clear.

And it certainly should be a major consideration in the award of ferry contracts by the public sector.

Of course, there has been good as well as bad news for Ferguson Marine of late.

Only last month, the Scottish Government announced the proposed award of major work to Ferguson Marine which would take up most of the yard’s capacity over the next five years.

The Scottish Government said on March 3 that it would award four new vessel contracts to Ferguson Marine under proposals announced to Parliament “to help secure a sustainable future for the yard and strengthen Scottish shipbuilding”.

It revealed that, subject to “appropriate due diligence processes to assess viability”, these direct awards would see the Port Glasgow shipyard construct the replacements for research vessel Scotia and fisheries protection vessel Minna for the Marine Directorate, alongside two ferries under phase two of the small vessel replacement programme.

The Scottish Government said: “The contracts match to the yard’s current capabilities and would take up most of its capacity for the next five years, whilst also enabling the yard to pursue additional commercial opportunities.”

Ferguson Marine has enjoyed success in winning work from BAE Systems for the Type 26 frigate programme.

However, it has been a rollercoaster ride for the yard when it has come to winning new work.

Ferguson Marine lost out in March last year to Remontowa of Poland in the contest to build seven fully electric ferries for CalMac.

First Minister John Swinney revealed on Friday that the Scottish Government had “explored” whether a direct award could be made to Ferguson Marine for the replacement vessel for the Lord of the Isles, but that “for a whole variety of technical reasons” this was not possible.

Graeme Thomson, chief executive of Ferguson Marine, highlighted his view that the CMAL criteria effectively ruled out UK shipbuilders altogether.

He said: “While we were eager to bring this project back to the Clyde, a rigorous review of the tender prequalification criteria indicates that, in our view, it is unlikely that any UK shipbuilder would meet the stipulated minimum qualification requirements.”

Mr Thomson added: “The original vessel was built here at Ferguson’s and has served the CalMac fleet for 36 years, a testament to the enduring quality of Scottish craftsmanship.

“However, without a procurement model that scores UK social and economic value and builds domestic supply-chain resilience, which is in line with government nationwide guidance, UK shipyards remain at a disadvantage against heavily subsidised foreign competitors.”

Procurement of ferries is undoubtedly a complex area, with the potential for legal challenges to direct awards meaning that careful consideration of what is possible and what is not on this front is crucial.

You would imagine that exploration of the possibility of a direct award of the contract for the Lord of the Isles replacement to Ferguson Marine would have been a detailed affair - you would certainly hope so.

However, it does seem most unfortunate that CMAL’s criteria do not even allow Ferguson Marine to make a bid to replace the vessel built by the yard in 1989.

And it would surely be difficult to overstate the importance of factoring in the social and economic value of the Port Glasgow yard winning contracts, in terms of providing employment and ensuring crucial commercial shipbuilding capacity is retained for decades to come.