SCOTLAND'S public spending regulator has told state-controlled ferry purchasers Caledonian Maritime Assets Limited (CMAL) and Transport Scotland there is a duty to investigate fraud after claims the awarding of the ferry fiasco contract to tycoon Jim McColl's Ferguson Marine was rigged.
Audit Scotland has had initial discussion with both Scottish Government-controlled agencies about their duties while considering a new inquiry into two the late and over-budget ferries.
Being built at the Ferguson Marine shipyard in Port Glasgow - which is owned by the Scottish Government - the vessels have encountered numerous issues, leading to questions about the process and the procurement.
Deputy First Minister John Swinney has previously stated they were "not aware of any impropriety in the procurement process" while saying allegations will be looked into.
The Herald revealed in May that Ferguson Marine could not fulfil mandatory requirements to qualify to even contest for the contract for two lifeline ferries which remains languishing in an Inverclyde yard, over five years later with costs soaring from £97m to nearly £350m.
Evidence showed that the tycoon's shipyard firm which was favoured by the SNP government could not give a commitment to provide a mandatory builder's refund guarantee (BRG) as required and was unable to provide other crucial financial details.
The fails, which raised questions about the legality of the procurement process, were revealed in a confidential Pre-Qualification Questionnaire (PQQ) completed by Mr McColl's Ferguson Marine Engineering Ltd (FMEL) before it was ever even considered as a preferred bidder for the building of Glen Sannox and Hull 802 to serve Scotland's islands.
There have been further claims that Ferguson obtained a 424-page 'crib sheet' from a design consultant setting out CalMac's technical requirements, while other bidders had to rely on a more limited 125-page specification. CMAL say this was not provided by them.
But particular focus fell on the failure of Ferguson to offer a builder’s refund guarantee, which would have protected public money once construction ran into problems - which it did.
Mr McColl has said that he only bid for the work on Glen Sannox and Hull 802 after receiving written guidance from transport minister Derek Mackay that refund guarantees were not mandatory to win building work.
Mr Mackay told a local MSP in a letter six months before Mr McColl’s Ferguson Marine yard became preferred bidder that transport bosses saw refund guarantees as only “a preference”.
The Herald revealed that ministers offered a special incentive to ensure Mr McColl’s Ferguson got the £97m contract to ease the concerns of CMAL over the lack of the BRGs which would put them and the taxpayer at financial risk if things were wrong - which it did. It meant that the taxpayer ended up carrying the financial burden of the project, rather than CMAL.
CMAL which procures ferries for the CalMac fleet said they were "effectively instructed" by ministers to award the contract to Ferguson.
The Auditor General said there were new concerns and claims related to whether CMAL followed due process.
Auditor General Stephen Boyle has said in a letter: "Although CMAL is a company limited by shares under the Companies Act, it is classified as a public corporation and, as such, is required to comply with relevant sections of the Scottish Public Finance Manual (SPFM). In relation to fraud, the SPFM requires CMAL to undertake a thorough investigation and to take appropriate legal and/or disciplinary action where justified.
"It is further required to take appropriate disciplinary action where supervisory or management failures have occurred.
"We have had initial discussions with CMAL and Transport Scotland (as CMAL’s sponsor) about their duties to investigate. Both bodies will keep us informed about their planned actions and I will take this into account when considering the scope and timing of any audit work."
The Scottish Conservatives have said the police should be called in to investigate.
In a letter to the Public Audit Committee Mr Boyle said he was considering expanding previous audit work done on the ships, given the documentary.
Previously, Audit Scotland raised questions as to why a builder's refund guarantee - which would protect the buyer - was not part of the contract with Ferguson Marine despite usually being a mandatory consideration.
If the decision was taken to re-investigate, Mr Boyle said, he would focus on "the circumstances that allowed (Ferguson Marine) to progress beyond the pre-qualification stage of the procurement, despite being unable to meet the mandatory requirements".
Mr Boyle said he would investigate "(Ferguson Marine's) access to restricted technical information about the vessels, and its use of this when preparing its bid for the contract".
He said he would also look into "CMAL's compliance with procurement rules (that apply to the Restricted Procedure) during the tender clarification and negotiation process".
In his letter to the committee - which is undertaking an inquiry into the ships - Mr Boyle added: "There remain several unanswered questions on the procurement, including the circumstances surrounding (Ferguson Marine's) inability to provide a refund guarantee, and I note that the committee has recently issued four separate written requests for further information.
"I will take the responses to these requests into account when deciding the scope of any audit work."
He also said he will consider the responses from public bodies to the accusations and has had "initial discussions" with both CMAL and Transport Scotland about their "duties to investigate", adding: "Both bodies will keep us informed about their planned actions and I will take this into account when considering the scope and timing of any audit work."
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