CalMac sues Scottish Government over ferry contract row

The publicly owned ferry operator is taking legal action against the Scottish Government over a decision not to award the company a £450m contract to run the Northern Isles ferry service

CalMac, the publicly owned ferry operator, is taking legal action against the Scottish Government over a decision not to award the company a £450m contract to run the Northern Isles ferry service.

Paul Wheelhouse, the Minister for Energy, Connectivity and the Islands, informed MSPs on Wednesday of the action, which follows a dispute process that began after the current operator, Serco, was rewarded the contract in September.

Opposition parties described the situation as a “fiasco” and a “saga”.

The legal action means the awarding of the new contract has been suspended, although the Scottish Government is looking to extend the previous contract to ensure continuation of service on the route.

The government has said that service will not be disrupted as a result.

The six-year long contract is to run the publicly subsidised lifeline routes from Aberdeen to Lerwick and Kirkwall, and from Scrabster to Stromness.

This will be the second time the previous contract has been extended over the dispute.

CalMac, which operates services across Scotland’s west coast and outer isles, began challenging Transport Scotland in October on the decision to award the contract to rival bidder Serco, despite CalMac making a cheaper tender.

At that time the Scottish Government said its awarding process took both the price and quality of the bids into account.

Writing in a letter to opposition transport spokespeople Wheelhouse said: “On Scottish ministers’ behalf, Transport Scotland are liaising with the current operator, Serco Northlink, to make arrangements for the extension of the current contract to maintain continuity of service and full connectivity to and from the Northern Isles.

“This will ensure that the local communities, passengers and businesses who rely on the services, and the staff who work on them, can be assured that services will be run as normal throughout these proceedings.

He added: “It should also be noted that the proceedings do not affect our recent commitment to fare reductions on the Shetland routes for islanders, which will proceed from 1st January 2020, as promised.”

The Liberal Democrat MSPs representing the affected regions called on the dispute to be resolved as quickly as possible.

Orkney MSP Liam McArthur said: “It is deeply disappointing that CalMac has chosen to go down this route. It is not clear what the basis for the legal challenge is but communities in Orkney and Shetland will be appalled at this latest development.

“Island residents and businesses depend on these lifeline services. The letting of this contract has already been delayed by more than 18 months. Continued uncertainty over the future of the service is the last thing communities in Orkney and Shetland need.

“Ministers must do everything possible to resolve this dispute as quickly as possible”.

Shetland MSP Beatrice Wishart added: “Procurement for the next Northern Isles Ferry Service contract has been hit by a number of unacceptable delays which does nothing to reassure people in the Northern Isles that the Government is committed to improving our lifeline ferry services.

“It is imperative that this dispute is resolved as soon as possible in the best interests of people in Orkney and Shetland.”

Scottish Greens transport spokesman John Finnie MSP said: “The fact that the publicly owned ferry company is taking the government that owns it to court does not fill me with confidence, and certainly doesn’t suggest that Transport Scotland has a handle on what’s happening.

“Ironically, when the Scottish Government first announced that the contract would go out to tender, instead of awarding it to the public operator as Greens favour, they claimed they had done so AS? to avoid the possibility of legal action.

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“I expect the Islands Minister to come before parliament as a matter of urgency, explain exactly what is going on and how my constituents will be affected by this protracted saga.”

Scottish Labour’s spokesman for transport, connectivity and rural economy, Colin Smyth, called the situation a “fiasco” and criticised the decision to award the contract to Serco in the first place.

He said: “The decision to award the contract to a private company which subcontracts to companies that do not pay the minimum wage already raised serious questions about the SNP government’s decision, but now it seems their own company has no confidence in that process and SNP ministers have serious questions to answer.”

The Scottish Conservatives Highlands and Islands MSP Jamie Halcro Johnston said: “It’s quite incredible that the SNP is being sued by one of its own quangos.

“It tells you everything you need to know about the mess the SNP government has made of ferry services that a publicly-owned company wants to take it to court, leading to more uncertainty and delay for travellers.

“When factored in with the completely unacceptable delays with the two new ferries being built, the delays on reducing fares to Orkney and Shetland and its refusal to meet its pledge on fair funding for inter-island ferries, this really is turning into a fiasco.”

Speaking in parliament on Wednesday, Wheelhouse said: “Given the ongoing legal proceedings, Scottish Ministers are limited in what we can say at this stage, so as not to prejudice the outcome of those proceedings.

“However, I can confirm that Scottish Ministers remain fully committed to the provision of safe, effective and reliable ferry services to the Northern Isles.

“On behalf of Ministers, Transport Scotland are liaising with the current operator, Serco Limited, to make arrangements for the extension of the current contract to maintain continuity of service and to ensure full connectivity to and from the Northern Isles.

“This will mean that the local communities, passengers and businesses who rely on the services, and the staff who work on them, will not be affected by the legal proceedings and services will be run as normal throughout this period.

“The legal proceedings will not affect our recent commitment to fare reductions on the Shetland routes for islanders, including a 20% discount on cabin fares and a three year fares freeze from January 2020 on the Northern Isles ferry services that builds on the existing 30% discount for passenger and vehicle fares already enjoyed by islanders.”