Ex-minister Derek Mackay defends his ferry deal role

Former minister Derek Mackay has defended his decision to award a controversial ferry contract without the normal financial safeguards.

Mr Mackay was transport minister when Ferguson Marine was awarded a contract to build two new ferries in 2015.

An Audit Scotland probe was unable to establish why the £97m order was given to the yard without the usual guarantees.

Mr Mackay said he understood the risks identified had been resolved.

The two ships, which are still being built at the Port Glasgow yard, will be at least five years late when they finally come into service and costs have risen hugely from £97m to £250m.

Mr Mackay, who resigned from the Scottish government two years ago over "foolishly" messaging a 16-year-old boy on social media, has now submitted written evidence on his involvement to Holyrood's Public Audit Committee.

In it he explains he was first aware of the issue over the financial guarantees following the selection of Ferguson as the preferred bidder, which was at the end of August 2015

He said he saw the detail of the issue in a submission to him on 8 October 2015.

Mr Mackay goes on to say that the recommendation in the submission from government agency Transport Scotland was "to proceed to contract award".

He said he had confidence in the recommendation but appreciated that risks had been identified and understood to be resolved.

The former minister said there was a high level of confidence in the yard, which had successfully completed other vessels for the CalMac fleet.

He said there was also an expectation that there would be sufficient monitoring and oversight of the ferries.

However, the construction of the ferries has been hit by problems and delays.

The Glen Sannox and another vessel, only known as hull 802, are still under construction at the Port Glasgow shipyard, which was taken into government ownership in 2019 after it went into administration.

One of the key findings of the Audit Scotland investigation in March this year was that there were inadequate financial safeguards in place to protect public money.

Shortly after being named as preferred bidder, Ferguson Marine (FMEL) notified CMAL, the government agency which owns and procures ships for CalMac, it could not provide the full Builder's Refund Guarantee (BRG) - which was stipulated in the contract.

This would have provided full repayment guarantees if the ships were late, failed to meet specification or if the shipbuilder went bust.

When he learned of the terms of the draft contract, CMAL's chairman wrote to Transport Scotland suggesting the level of risk was too high and he suggested that it might be necessary to restart the procurement process.

Negotiations followed during which FMEL improved its alternative to a full BRG.

Transport Scotland later told the CMAL board that ministers were aware of the risks and were happy to proceed based on the revised offer from FMEL.

In his written response to the committee, dated 23 June, Mr Mackay said he was satisfied that "all relevant officials" had been involved in the submission.

He said he had "confidence" in the recommendation to proceed with awarding the contract as the submission had followed the "necessary process, procurement assessment and milestone stages".