Scotland's ferry crisis: What you need to know about the scandal

Scottish Government-owned Caledonian MacBrayne is the key operator of the lifeline passenger and vehicle ferries between the mainland of Scotland and 22 of the major islands on Scotland's west coast.

It says it runs 29 routes to over 50 destinations, across 200 miles of Scotland's west coast.

The fleet of 35 vessels completes approximately 136,000 sailings a year with crossings ranging from five minutes to five and a half hours.

CalMac says that in 2019, its busiest year to date, they carried more than 5.6 million passengers.

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But in recent years the services have been plagued by disruptions and cancellations as the ferry operator deals with an ageing fleet - while a scandal surrounds issues in waiting for new vessels to come online.

MV Isle of Cumbrae - CalMac's oldest ferry

What is the crisis about?

It began with a procurement process for two lifeline ferries which are crucial in attempts to replace CalMac's ageing fleet.

It is claimed it was rigged in favour of Ferguson Marine run by then independence supporting tycoon Jim McColl and has ended with continual delays and soaring costs in their delivery which are now five years late while costs are expected to quadruple from the original £97m contract.

Mr McColl, once a supporter of the Scottish Government's policy of independence for Scotland, but who said later he has political leanings rescued the yard in the summer of 2014 in a move partly brokered by former first minister Alex Salmond, who kept the entrepreneur abreast of businesses that needed saving.

A year later, the yard received a major boost when it won the ferry contract with critics claiming it was cronysism as the yard submitted the most expensive bid for the work out of six competing yards.

Nicola Sturgeon announced that the yard was the preferred bidder when she joined Mr McColl on a visit to the yard on 31 August 2015.

The award was made despite concerns from the Scottish Government-owned ferry procurer CMAL that Ferguson Marine was unable to provide a "builders refund guarantee" giving protection to the buyer. But the Scottish Government provided CMAL with special financial guarantees to ensure it was not out of pocket to allow Ferguson's to finally get the contract in October, 2015.

So what did go wrong?

The two vessels Glen Sannox and the so-far unnamed Hull 802 were supposed to be delivered by mid-2018 but the first problems with the delivery of the project were reported in December 2015 - just two months after the contracts were signed.

By August 2019, the yard firm went into administration amidst soaring costs and delays and was nationalised with Ferguson Marine and CMAL blaming each other for what went wrong. Both vessels are yet to take on any passengers as delays have now gone over the five year mark.

Public spending watchdogs Audit Scotland estimated in March that the the cost to complete the vessels was £293m - with the taxpayer footing the extra costs - before extra millions were approved by ministers.

What caused the delays and rising costs?

The ships were to be a new hybrid design - powered by marine diesel oil and liquefied natural gas (LNG) - a first for a UK shipyard - but problems multiplied as the project progressed and construction fell way behind schedule.

Ferguson Marine experienced cash flow problems from 2016 which it stated were due to problems with the contract.

Disputes between CMAL and Ferguson Marine centred on the level of concept design that was carried out on the vessels and changes to the design of the vessels after the contract was awarded.

Ferguson Marine considered that the vessels were prototype and CMAL’s conceptual design was inadequate. It said that CMAL changed its requirements and interfered in the design process throughout the project, and that it delayed making decisions which hindered progress and increased costs. It also considered that CMAL became hostile and was not willing to engage in discussions.

READ MORE: Ministers do not rule out more public money millions over ferry crisis

CMAL say the vessels were not prototype, the tender documents were clear that the concept designs and drawings were to be fully developed as the project progressed, and the contract was clear that the detailed design was the sole responsibility of the Ferguson Marine. It said Mr McColl's firm overstated the number of design changes and that it simply wanted delivery to specification.

In 2017, the Glen Sannox was “launched” at a ceremony attended by First Minister Nicola Sturgeon (see video above). It since emerged it was far from finished with the windows on the bridge painted on for the event and the funnels were "temporarily fixed" to make the vessel appear more complete.

Ferguson's build strategy had been to complete work on Glen Sannnox after the launch.

A “bulbous” bow was later found to be defective, and had to be replaced.

After nationalisation, further construction issues were found - including hundreds of cables that were too short and a failure to install a crucial ducktail on either vessel.

Who’s at fault

Both CMAL and Mr McColl have blamed each other for the problems that have beset the construction of two CalMac ferries.

CMAL claimed Ferguson's started building the ship before the design stage was finished.

And Mr McColl said the problems were caused by CMAL "chopping and changing" the ferry design, and said a public inquiry was needed to get to the truth.

In May, 2018, as part of a funding package consideration for Ferguson Marine, the Scottish Government appointed a consultant to carry out a review.

The consultant said the shipyard was impressive for its size with improved infrastructure that allowed the shipyard to adopt a new approach to shipbuilding. It had applied lessons learned from Glen Sannnox to the design and build of Hull 802 and its resourcing plan was adequate to complete the contract.

Audit Scotland said the conclusions contradicted CMAL’s assessment of the shipyard firm's capabilities at that time.

Luke van Beek, who was brought in by the Scottish government to advise on problems with the project, later said there had been a breakdown in communication between the various parties who were involved.

He said the shipyard was well run, but there was acrimony between Ferguson Marine and CMAL because the basic design of the vessels had not been agreed and was too vague when the contract was first awarded.

He said there was blame on all sides for the project being delayed and over-budget.

A report by Audit Scotland published in March said the there was a "multitude of failings" with the absence of a full-refund guarantee a major issue.

What did the Scottish Government say?

Before stepping down as First Minister, Nicola Sturgeon said "the buck stops" with her regarding the ferries debacle but then noted the contract was actually former transport minister Derek Mackay, who resigned in 2020 over allegations that he had sent inappropriate texts to a teenage boy.

Mr Mackay said he thought "CMAL has a case to answer" and rejected suggestions Scottish Government ministers were to blame.

The Scottish Government said that construction of the ferries was a commercial contract between FMEL and CMAL. They say that once it became apparent the parties would be unable to reach agreement on the contractual dispute the Scottish government worked to find a solution that would result in the completion of the vessels and a future for the yard.

That involved encouraging both parties to use all methods available to resolve the dispute, including mediation.

Can the problem be resolved?

Four new vessels have been procured by CMAL to be built by a shipyard firm in Turkey. Nationalised Ferguson Marine failed to get past the questionnaire stage of a contract process for two of the vessels - and did not bid for the second pair.

Moves have been made to scour the world for second-hand ferries and the Scottish Government sanctioned a nine-month charter of MV Alfred at a cost of £1m per month from Pentland Ferries. It has begun operating to and from Arran as the second vessel - amidst disruption and cancellations due to faults discovered with the current fleet during annual maintenance checks.

In March, in the latest of a long series of delays it emerged that Glen Sannox was now rescheduled to finally set sail in autumn 2023 with a "contract backstop" of no later than the end of December 2023.

Hull 802 was now not expected online till the autumn of 2024 with a contract backstop set for the end of December 2024.

Last week ministers sanctioned a further £61m budget for Ferguson Marine after months of due diligence which found that it was not value for money to complete the second of the vessels, known only as Hull 802.

Analysis of the money trail shows the cost to the taxpayer of supporting Ferguson Marine both before and after nationalisation has soared to more than £450m.