Chamber and committees

Various conversations took place throughout the process, but we start from the premise that the project was bungled at the point of procurement, bungled at the point when the refund guarantee came into question, bungled at the design phase, and bungled at the point at which requests were made for some degree of arbitration between the parties.

In the submission from FMEL’s management, Mr McColl states that, in February 2017, the shipyard

“informed Scottish ministers that it was highly probable that the vessels would be late.”

It is clear that alarm bells were being rung at that point.

The submission from Mr McColl and his colleagues goes on to say:

“Our chairman met with the First Minister on the 31st of May 2017 at Bute house to request her intervention to facilitate a meaningful discussion around the very significant unplanned changes and cost increases being experienced on the two ferry contracts.”

What readout did Transport Scotland or the Scottish Government get from that meeting? Who else would have been present?

I would disagree with you on the issue of whether it was bungled. It could be alleged that it was bungled at the point of nationalisation. Could you flesh out for the committee why the Scottish Government decided to proceed with nationalisation without a full understanding of the costs and challenges that were faced in relation to the vessels?

I accept all that but, at the point of nationalisation, there was a material change in where the risk for future cost overruns would lie. It was shifted on to the taxpayer. You are the deputy director of the Scottish Government’s strategic commercial interventions division, so you should be able to read a contract. The way in which the contract is now laid out is such that, in effect, it is writing a blank cheque, is it not? The taxpayer will continue to fund the vessels until they are completed or some other decision is taken.

The question is looking for a yes or no answer.

If the procurement process was not bungled, would you concede that it was rushed? One of the suggestions from the FMEL side is that it was rushed because the First Minister, Nicola Sturgeon, was preparing for her first party conference and that the Government wanted to get the announcement out

“just before George Osbourne announced a £500m investment in Faslane.”

Did anyone in the Government or Transport Scotland question why the timetable was being so rushed?

Perhaps Mo Rooney might want to come in on this point. A big contractual change took place in terms of where the risks for the project lay. Earlier in the meeting, in an exchange with Sharon Dowey, Ms Rooney said:

“This is certainly not a blank cheque, if that is what is being suggested. Ministers have been really clear with the board, the management team and the workforce that these vessels need to be delivered within the budget that has been allocated. Each organisation—Ferguson’s and CMAL—and each part of the Scottish Government that is involved in this all share the obligation to deliver as efficiently as possible, with an eye to value for money. There is no blank cheque.”

That is the account that you gave the committee earlier, Ms Rooney. However, paragraph 105 of the Auditor General’s report says that, as part of the new contract arrangements,

“The Scottish Government is committed to paying”

—in full—FMPG’s additional vessel costs,

”regardless of the final price.”

That is a blank cheque, is it not?

And if they should be, for example, another £50 million over budget, who will pay for that? Where will that money come from?

Is there still the possibility that you could pull the plug on the two vessels?

Good morning, everyone. I want to go back to a question that I would have asked Roy Brannen had he been here. When you were last before us, I asked Mr Brannen whether CMAL had been overruled or whether there was a threat to overrule it, and he said explicitly that that was not the case. However, in a submission from the senior management team at FMEL, they suggest that some degree of overruling took place.

I will quote from that submission at some length, just for context. It states:

“Our chairman met with the cabinet secretary for finance Derek Mackay on the 5th of June 2018 to insist that the Scottish Government intervene to instruct CMAL to take part in an Expert Determination Process”.

The chairman was told explicitly that the Government would not do so. The submission continues:

“Derek Mackay told him that he could not do this because ministers had received a legal letter from the CMAL Board, threatening to resign en masse, if the government interfered with them, as an independent board. Derek Mackay said that this would be politically very damaging for the government, and he could not intervene.”

Mr McColl says that the reason that the Government was not prepared to intervene at that stage was that

“The government had forced CMAL to place the order with Ferguson against their will. We were not aware at the time of the strength of opposition from CMAL to placing the order with Ferguson. Had we known this at the time it would have caused us to seriously question accepting the order.”

Why does Mr McColl believe that CMAL was overruled? Is he misrepresenting, misrecollecting or providing a misleading account of the situation?

You are absolutely certain that nobody was overruled and that there was no threat to overrule anyone.