Save our shipyard: Appeal to give vital ferry work to Ferguson Marine

And Inverclyde council leader Stephen McCabe one of the chairs of the task force said there should be no legal impediment to giving the contract to the Inverclyde shipyard firm.

He points to the Scottish Government saying a direct award to state-owned CalMac is the preferred option for the next contract over the future of lifeline ferry services.

It comes after the Herald revealed directors of Ferguson Marine (Port Glasgow), which has made a net loss of £1.3m in 2022/23 have laid bare the risks to the business and pointed to a failure to get a committed investment of £25m to support future work at the Inverclyde after the delivery of two long-delayed and over-budget ferries.

They have admitted that the lack of investment to upgrade shipyard facilities as part of a five-year business plan puts at risk its hopes of extra work from the replacement of seven 50m ageing 'loch class' ferries vessels serving the Clyde & Hebrides Ferry Services (CHFS).

The Herald on Sunday revealed that some of the small ferry replacement project has been put off by at least seven years as ministers 'breached' a policy to replace ferries at the end of their working life.

Concerns surfaced that two of seven vital 'loch class' ferries initially planned for Scotland's islands as part of the £160m Small Vessel Replacement Programme (SVRP) should already have been delivered - at least four years ago.

It comes as it emerged that ministers have failed to deliver on an 11-year-old policy to replace ferries when they reach around 30 years old.

Some 14 of Scotland's west coast ferry fleet are 30 years old or over with the oldest being MV Isle of Cumbrae at 47-years-old.

Ministers are currently carrying out further investigations over whether to give CalMac the contract for the beleaguered west coast ferry services and effectively close the door to opening routes up to private operators.

Transport minister Fiona Hyslop has said 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".

Mr McCabe has called on the government "to support a direct award of the small ferries contract to Ferguson's adding: "Without it, I fear for the future of the yard. Its closure would have a devastating impact on the Inverclyde community.

"The Scottish Government is currently consulting on a direct award to CalMac of the Clyde and Hebrides Ferry Service contract. There should no legal impediment therefore to them making a direct award to Fergusons of the small ferries contract."

Ferguson Marine has been hurt by issues with delays over the delivery of lifeline ferries Glen Sannox and Glen Rosa which were due online in the 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. The last estimates suggest the costs of delivery could more than quadrupled from the original £97m cost.

Ferguson Marine was taken over by the Scottish Government four years ago after its financial collapse under the control of Mr McColl as a row erupted over long delays and mounting costs over the delivery two lifeline vessels.

The Inverclyde Socio-Economic Task Force brings together Scottish and UK Governments together with Inverclyde Council and a range of partners in a bid to ensure Inverclyde is prioritised for investment.

The principles behind the original development of the joint task force were to secure new opportunities and safeguard existing ones to support economic recovery.

During the summer, Mr McCabe and the Task Force's co-chair the SNP MSP for Greenock and Inverclyde, Stuart McMillan called on Mr Yousaf to "directly intervene and promote a process for procurement that identifies Ferguson Marine as a partner with CMAL in the development and build of the new small ferries fleet".

They said: "In addition to capitalising on local expertise, Ferguson Marine has experience of delivering on time and on budget similar classes of vessels.

"The community benefits of this partnership approach, which cannot be calculated through a bidding procurement process, would be the retention of existing skills and jobs; the development of new skills, jobs and apprenticeships; and longer-term security for the local workforce and the wider supply chain.

"A single source partnership arrangement, carried out diligently to ensure its integrity is beyond question, would give the company and workforce certainty and provide a foundation on which to grow the business to profitability. It would also help to put the yard into a competitive position to bid for future contracts out with the Scottish Government to secure that long term stability we all want to see at Ferguson Marine."

They said they hoped for a "positive outcome that supports the workforce at Ferguson Marine and helps to deliver on the commitments we have all made to ensure Inverclyde is a priority area for investment".

But the response came from wellbeing economy secretary Neil Gray who could not give a commitment over the procurement of the vessels.

And he said it would be for government-owned ferry owning and procurement agency Caledonian Maritime Assets Ltd to consider if they wished to pursue the kind of arrangements proposed.

He added: "I am keen that we consider the merits of any options that are consistent with public procurement rules and that align with our stated objectives around the future of the yard."

Mr McCabe said the response was "disappointing".

"I had previously written to Kate Forbes when she was Cabinet Secretary [for finance] and she advised me that the government was considering the implications of a direct award. They really need to come to a decision on this as soon as possible given the uncertainty over the future of the yard."

David Tydeman, the chief executive of Ferguson Marine outline concerns over the future of the yard in a financial statement.

While he said they had received a letter of comfort from the Scottish Government reaffirming a commitment to supporting a "sustainable future" for FMPG, there remained a "material uncertainty" that casts "significant doubt" over the Ferguson Marine group of companies to continue as "a going concern".

On November 12, Mr Gray confirmed it had so far refused to sign off on an estimated £25m investment to support future work at the Inverclyde yard saying an independent due diligence over an initial capital request found it could not meet the commercial market operator test - a key legal requirement effort to demonstrate compliance with the UK subsidy control regime.

Transport Scotland officials have been examining how to make a direct award to CalMac over the west coast ferry services contract which expires in September, next year, without leaving itself open to legal challenges through a breach of the UK's version of the state aid rules.

The idea behind state aid rules is to avoid financial assistance given by a government that favours a certain company or commercial group and has the potential to distort business competition.

A Holyrood 'future of ferry services' inquiry gave the nod to keep the operation of west coast ferry services with CalMac in the shorter term despite the Scottish Government-owned ferry operator receiving some £10.5m in poor performance fines in the six-and-a-half years since it took the franchise – nearly eight times more than in its first nine years in charge of the west coast fleet.

Transport Scotland officials examining how to continue west coast ferry operations are known to have been looking at the potential to provide the direct award using what is described as a Teckal procurement exemption to avoid what some would see as unlawful state aid.

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.

The exemption was originally developed through EU case law to allow contracting authorities to award a contract to a supplier without the recourse to a regulated procurement procedure.

A Scottish Government spokesman said: “The Scottish Government is committed to doing all it can to secure a sustainable future for the yard and its skilled workforce. This includes working with the board to build on its initial proposition and develop a new business plan and investment case which must reflect deliverable market opportunities.

“Direct award is legal in strictly limited circumstances under public procurement rules. We are considering future vessel contracts from public agencies on a case-by-case basis and whether any might be legally open and appropriate to directly award.”