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Displaying 3032 contributions
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
I want to come back in on a couple of points that you touched on earlier. First, I have managed to dig out the cost of purchasing FMEL’s assets. I realise that there are all sorts of offset figures involved, so this is a crude figure, but it is £7.5 million. That was the valuation put on all the assets in the yard, which is very far short of the money that went in there.
Secondly, the milestone payments were £83.25 million. In fact, £82.5 million was for milestone payments, but £0.75 million was for contract variations. That seems a very small figure, after listening to what you have been saying—
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
Is there any—
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
How was the £128.25 million of public money that was invested in the yard and in the construction of the ships spent?
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
The committee really needs to understand that. From looking at what the REC Committee produced, its view seemed to be that the way in which the milestone payments had been done was extraordinary, because the sections were constructed out of sequence and so on. That implies to me that what I have read out was the case. Did the work between A and B take place to allow the milestone payment at B to be triggered?
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
So there are large discrepancies—
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
I want to turn to a specific area—that of the milestone payments that totalled about £83.25 million. Paragraph 160 of the report that the Rural Economy and Connectivity Committee published back in December 2020 says:
“there is strong evidence that the contractor deliberately proceeded to construct specific sections of the vessel either out of sequence or not according to the proper specification purely as a means of triggering milestone payments on the contract.”
Paragraph 157 talks about
“the contractor progressing certain work on the vessels either incorrectly or out of sequence purely in order to trigger payments against the contract”.
10:15Commodore Luke van Beek also gave evidence to the committee that Ferguson’s deliberately slowed down some of the subcontracting. I am a layman, so I do not understand naval contracts, but if there are milestones at A, B and C, and the work between A and B has not been carried out and only the work at the milestone has been done in order to trigger a payment, that does not seem to me to be right.
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
Given your statement that the milestone payments were payments for large equipment and so on, for example—
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
That is not evidenced by the value at the point of nationalisation.
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
Yes.
Public Audit Committee
Meeting date: 16 June 2022
Colin Beattie
What I am saying is that, from the committee’s point of view, we can only look at evidence that we receive that we are able to scrutinise.