Community board opposes plan for uncontested CalMac contract

The Scottish Government's bid to provide a direct public contract to CalMac to run the ageing ferry fleet without going through a competitive tendering process is opposed by its community board.

It is understood that a permanent contract is an option on the table – after it emerged that an uncontested 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 ferry operator received some £10.5m in poor performance fines in the six-and-a-half years since CalMac took the franchise – nearly eight times more than in its first nine years in charge of the west coast fleet.

CalMac's current £975m eight-year Clyde and Hebrides Ferry Services contract expires in September 2024.

It had previously won the contract for six years in 2007 – after ministers were forced to tender for routes to satisfy European competition rules.

The Scottish Government has said that a direct award with no contest from other potential bidders is the preferred option – closing the door on opening routes up to private operators.

A final decision after a due diligence process – which will establish the feasibility of that approach from a financial, operational and legal perspective – is expected in the summer, with an aim to have the new arrangement in place by October 1 next year.

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But the Ferries Community Board, formed as part of CalMac's franchise bid for the Clyde and Hebrides Ferry Service to be the voice of the communities, is opposed to the move.

It has said that in response to the ferry service inquiry by the Scottish Parliament's Net Zero, Energy and Transport Committee, communities represented "unanimously" do not support a direct award of the next contract.

The ferries community board has said that to gain community support for a long term directly awarded contract, they would need to see "significant change in the structure organisation and culture of the management and operation of the ferry services".

It says it would want to see a "radical overhaul" of the contract itself with "revised measures of success and far greater accountabilities" to the communities served by the ferry services in Scotland.

A board source said that the position "reflects the strong feedback from the communities to the board across the CHFS area, which we continue to represent".

It is understood that the board is pushing for a structure and process that makes the ferry operator accountable to the communities that they serve.

Angus Campbell, chairman of the Ferries Communities Board, told ministers that to make future contract and organisational changes work "we must change the culture of the bodies involved in delivering ferry services".

The analysis said that it was felt that CalMac and ferries and ports and harbours owner Caledonian Maritime Assets Limited should be scrapped and merged into one body to become more efficient and produce financial savings as part of a revolutionary culture change in the way lifeline services are provided by ferries.

The overview of a series of consultation meetings produced by the Ferries Community Board for the Scottish Government says that a strong case has been made for including the ferries division of the Transport Scotland agency into the new body.

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One ferry group official said the stance confirmed that it was "unthinkable" to consider giving a permanent contract before there are massive improvements to the way ferry services are being delivered.

"If there is resistance from communities about the possibility of a non-contested contract, it is puzzling that the Scottish Government is considering this.

The Scottish Government has previously said that 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".

One advantage cited for a direct contract is a saving on the tender process. The Scottish Government has estimated that the costs of tendering the 2016 to 2024 contract was £1.1m. But that included a £439,000 bill for consultancy support.

But public spending auditors which were critical of the process said bidders had told them that their costs were increased due to delays during the project.

Transport Scotland officials have been examining how to make a direct award to CalMac without leaving itself open to legal challenges through a breach of the UK's version of the state aid rules.

Ministers have been taxed with the vexed question of unlawful state aid since being found guilty of doing just that in relation to two airports.

Under EU rules, member-state governments are expected to notify the European Commission – which is in charge of treaty compliance – about proposed state aid moves.

Now that the UK is out of the EU, the procurement principles that exist in Scotland are still derived from EU law.

The government had considered two contractual arrangements to ensure continued operation of these services at the end of the current contract.

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.

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A Transport Scotland spokesperson said: "The Scottish Government’s preference for the next contract is a direct award to CalMac using the Teckal exemption but, regardless of the chosen procurement route, it’s vital we take island views on board.

"Direct award could allow us to deliver the improvements that island communities have been calling for such as improved resilience, greater transparency, better communications, and more certainty for communities and staff. This would include an improved performance management regime better reflecting passenger experience and intended to act as a catalyst for change not a reinforcement of existing habits."