£6m of public money spent on consultants to fix Scotland's ferries

That comes on top of more than half a million pounds that was spent by ministers with the consultants between 2015 and 2022.

Ernst and Young was awarded its latest £250,000 contract at the start of the year to look into the legal and financial impacts of whether state-owned ferry operator CalMac can be given a new contract for the beleaguered west coast ferry services by "default" without going through a competitive tendering process.

The year-long contract, due to end in January, next year forms part of a due diligence over the Scottish Government's preferred option to directly award the next contract over the future of lifeline ferry services to CalMac.

According to the contract specification, Ernst & Young, which trades under the name EY, will "fully examine the financial impacts of required governance changes" as well as any "identified restructuring" of both Scottish Government-owned CalMac Ferries and its parent company David MacBrayne Limited.

On April 3, Robbie Drummond stepped down as chief executive of CalMac with "immediate effect" following a review of its executive leadership as it faces "challenging years ahead".

READ MORE: Ferguson Marine: Ferry fiasco firm could be privatised in 18 months

Services to be provided by EY will also "validate and quantify the financial impact of structure changes" and to conduct a benchmarking exercise over the value for money of the proposed costs of the west coast ferry contract.

It will also carry out a wider long term affordability assessment.

Critics say the ministers should be using its own free expertise rather than use a management consultancy which has frequently been accused of promoting using private capital to redesign public services while advocating “public-private partnership”.

Contracts have worth £560,000 have already been paid out to the external multinational consultants which was tasked by ministers to look into the future of Scotland's ferry service structure including the option of “unbundling of routes into smaller packages”.

EY was paid £156,000 for the Project Neptune examination of the Scottish Government-controlled structure that underpins Scotland's ferry service.

A further £404,000 was given to EY for analysing the financial state of the Clyde and Hebrides Ferry Service contract operated by CalMac.

Project Neptune emerged amidst growing concern that the service was "cocooned" inside four levels of Scottish Government control with the Transport Scotland agency as funders, the procuring and vessel owning company, Caledonian Maritime Assets Ltd (CMAL), the ferry operators CalMac and the nationalised shipbuilders Ferguson Marine (Port Glasgow).

A further £5m of public money was spent on two consultancy firms last year which will help decide whether Scottish Government-owned CalMac will retain the west coast ferry contract from next year.

Transport Scotland recruited two sets of firms to provide legal and commercial advice over the award of the Clyde and Hebrides Ferry services contract.

International law firm CMS Cameron McKenna Nabarro Olswang LLP was recruited on a four year contract worth £1m to provide legal advice to the Transport Scotland ferries unit over the contract.

A further £4m was given to Edinburgh-based infrastructure consultants Turner & Townsend, which will examine commercial implications.

A ferry user group official said that amount of money being ploughed into consultants was "monstrous".

"The Scottish Government has its own internal advisers who should be carrying out this work without adding even extra millions onto what is already a scandalous sum involved in the ferry fiasco," he said.

Scottish Labour community safety spokesperson Katy Clark has previously been critical of the use of consultants.

Ms Clark, a West Scotland region MSP, a life peer and long-term former MP for North Ayrshire and Arran said the  Scottish government was "addicted" to outsourcing key work relating to the future of the public ferry service "rather than using its own civil service".

She said of the latest revelations involving EY:  "However, this example is particularly scandalous. Ministers are throwing public money at an unaccountable firm with a vested interest in private provision of public services and asking them to consider whether our publicly owned ferry company should receive a direct award.

"To say that is a conflict of interest would be an understatement.

"Rather than running to management consultancies every time there is a big decision to be made, the Scottish Government needs to step up and do the work. It is the very least ferry users, islanders and the workforce deserve.

"There must now be a full commitment to a direct award of the [ferry] contract to CalMac, backed up by serious investment in new fleet and infrastructure."

Project Neptune contained a proposal to merge the ferry owners and operators - who between them employ more than 1700 staff - into one organisation.

The Project Neptune probe issued scathing criticisms of the existing governance structure for the lifeline island ferry services.

Part of Project Neptune's remit was to look at whether the structure was "fit for purpose", against a background of years of failing, ageing ferries.

It criticised an “absence of long-term planning”, with a “sub-optimal” approach to the maintenance and replacement of vessels, potentially causing “higher than necessary or unforeseen maintenance costs”.

But the analysis also supported a move to turn the ferry owners and operators into one integrated publicly-owned company responsible for the operation and the supply of vessels on the west coast of Scotland.

Two new ferries Glen Sannox and Glen Rosa being built at the nationalised Ferguson Marine shipyard were due online in the first half of 2018, with one initially to serve Arran and the other to serve the Skye triangle routes to North Uist and Harris, but are at least six years late, with costs expected to be quadruple the original £97m contract. It has been confirmed that both are now to serve Arran.

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.

A final decision after a due diligence process over a direct award - which will establish the feasibility of that approach from a financial, operational and legal perspective - was expected by this summer, with an aim to have the new arrangement in place by October 1.

The First Minister Humza Yousaf, indicated in 2017, when he was transport minister, that it was his intention to scrap future tendering processes for the Clyde and Hebrides ferry services and appoint the contract to CalMac "indefinitely".

At the time the plan was subject to satisfying EU rules on state aid and a legal exemption allowing public contracts to be awarded to in-house companies subject to strict regulations.

Since the 1970s, the EU adopted legislation to ensure that the EU public procurement market is open and competitive and that suppliers are treated equally and fairly.

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.

Either a direct award to the current operator, in what is known as a Teckal arrangement in accordance with the Public Contracts (Scotland Regulations 2015, or a competitive tender on the open market. It opted for the direct award option but said a further due diligence was needed.

The Teckal procurement exemption is seen as a way 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.

European Union state aid rules and guidelines still have a huge influence on the how ferry services were paid for in Scotland.

The requirement to tender for the Clyde and Hebrides Ferry Service (CHFS) led Scottish ministers to change the structure of its ferry operations in 2007.

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

Before CalMac was awarded the current contract in 2016, the RMT union’s legal advice, provided by a European procurement law specialist, is that the exemption could be applied to Scottish ferry contracts tendered by the Scottish Government.

The QC for the RMT said that the rules leave the authority able to supply goods and services by itself and therefore not have to seek a tender.

A Transport Scotland spokesman said “It is common practise for a contract of this scale, significance and complexity to be supported by specialist external advisors.

“Ongoing work is being carried out to support development of the new CHFS3 [Clyde and Hebrides Ferry Service 3] specification and associated due diligence exercise. This covers all aspects of future CHFS arrangements from a legal, financial and operational perspective, including the potential of making a direct award.”