Achi news desk-
That comes on top of more than half a million pounds spent by ministers with the consultants between 2015 and 2022.
Ernst and Young was awarded its latest £250,000 contract at the start of the year to investigate the legal and financial implications of state-owned ferry operator CalMac being awarded a new contract for west coast ferry services besieged “by default” without going through a competitive tender process.
The year-long contract, due to expire in January next year, is part of due diligence over the Scottish Government’s preferred option to award the next contract directly for the future of lifeboat services to CalMac.
According to the contract specification, Ernst & Young, trading as EY, will “fully examine the financial impacts of the required governance changes” as well as any “identified restructuring” at CalMac Ferries, which owned by the Scottish Government and its parent company David. MacBrayne Limited.
On April 3, Robbie Drummond resigned as chief executive of CalMac with “immediate effect” following a review of his executive leadership as he faces “challenging years ahead”.
READ MORE: Ferguson Marine: Ferry fiasco company could be privatized in 18 months
Services to be provided by EY will also “verify and quantify the financial impact of the changes to the structure” and conduct a value for money benchmarking exercise for the proposed costs of the west coast ferry contract.
It will also carry out a wider long-term affordability assessment.
Critics say the ministers should be using their own free expertise rather than using a management consultancy which has often been accused of promoting the use of private capital to redesign public services while advocating a “public-private partnership”.
Contracts worth £560,000 have already been paid to the external international consultants tasked by ministers to look into the future of Scotland’s ferry service structure including the option of “unbundling routes into smaller packages”.
EY was paid £156,000 for a Project Neptune audit of the Scottish Government managed structure that underpins Scotland’s ferry service.
A further £404,000 was awarded to EY to analyze the financial condition of the Clyde and Hebrides Ferry Service contract operated by CalMac.
Project Neptune emerged amid growing concern that the service was “cocooned” within four levels of Scottish Government control with the Transport Scotland agency as funders, the procurement and ship ownership company, Caledonian Maritime Assets Ltd (CMAL), the CalMac ferry companies and the nationalized ones. shipbuilders Ferguson Marine (Port Glasgow).
A further £5m of public money was spent on two consultancy firms last year which will help decide whether CalMac, owned by the Scottish Government, will keep the west coast ferry contract from next year.
Transport Scotland recruited two sets of firms to provide legal and commercial advice on the awarding of the Clyde and Hebrides Ferry services contract.
International law firm CMS Cameron McKenna Nabarro Olswang LLP was recruited on a four-year, £1m deal to advise Transport Scotland’s ferries unit on the deal.
A further £4m was given to Edinburgh-based infrastructure consultants Turner & Townsend, who will examine commercial implications.
A ferry user group official said the amount of money invested in consultants was “unknown”.
“The Scottish Government has its own in-house advisers who should be doing this work without adding even more millions to what is already an outrageous sum associated with the ferry fiasco,” he said.
Scottish Labour’s community safety spokeswoman, Katy Clark, has previously been critical of the use of consultants.
Ms Clark, MSP for the West of Scotland region, a life peer and former long-term MP for North Ayrshire and Arran, said the Scottish government was “obsessed” with outsourcing key work relating to the future of the public ferry service “rather than using its own ferry service”. civil service”.
He said of the latest revelations about EY: “However, this example is particularly scandalous. Ministers are throwing public money at an unaccountable company with an interest in private provision of public services and asking them to consider whether our a publicly owned ferry company received a direct award.
“To say it’s a conflict of interest would be an understatement.
“Instead of running to management consultancies every time there is a big decision to be made, the Scottish Government needs to step up and do the work. This is the least ferry users, islanders and the workforce deserve.
“There has to be a full commitment now to a direct ruling from the [ferry] contract to CalMac, backed by serious investment in new fleet and infrastructure.”
Project Neptune included a proposal to merge the owners and operators of the ferry – who between them employ more than 1700 staff – into one organisation.
The Neptune Project auditor issued a scathing critique of the current governance structure for the island’s lifesaving ferry services.
Part of the remit of Project Neifion was to see if the structure was “fit for purpose”, against a background of years of failure, as the ferry was getting old.
He criticized the “absence of long-term planning”, with a “sub-optimal” approach to vessel maintenance and replacement, causing “maintenance costs higher than necessary or possibly unforeseen”.
But the analysis also supported a move to turn the ferry owners and operators into one public integrated company responsible for operating and supplying boats on the west coast of Scotland.
Two new ferries Glen Sannox and Glen Rosa were being built at the Ferguson Marine shipyard to be built online in the first half of 2018, with one initially to serve Arran and the other to serve the Skye triangle routes to North Uist and Harris, but they are at least six years late, and the costs are expected to be four times the original contract of £97m. It was confirmed that both were now to serve Arran.
CalMac’s current eight-year contract for Clyde and Hebrides ferry services, worth £975m, expires in September 2024.
It had previously won the contract for six years in 2007 – after ministers were forced to tender for routes to meet European competition rules.
A final decision after a due diligence process over a direct award – which will establish the feasibility of that approach from a financial, operational and legal perspective – was expected by this summer, with the aim of having the new arrangement in place by October 1.
Prime Minister Humza Yousaf, in 2017, when he was transport minister, said it was his intention to scrap future tender processes for Clyde and Hebrides ferry services and award the contract to CalMac “indefinitely”.
At the time the plan was subject to meeting EU state aid rules and a legal exemption that allowed public contracts to be awarded to in-house companies subject to strict regulations.
Since the 1970s, the EU has adopted legislation to ensure that the EU public procurement market is open and competitive and that suppliers are treated equally and fairly.
Now that the UK is out of the EU, the procurement principles that exist in Scotland are still derived from EU law.
The government had considered two contractual arrangements to ensure the continued operation of these services at the end of the current contract.
Either a direct award to the current operator, in what is known as a Teckal arrangement in accordance with the Public Contracts (Scotland Regulations 2015), or a competitive tender on the open market. He chose the direct award option but said further due diligence was needed.
Teckal’s procurement exemption is seen as a way of avoiding what some would see as illegal state aid.
The exception removes the legal obligation on a public authority to tender public contracts when it can be proven that the public authority can provide the services itself, subject to certain ‘controls’ and tests.
European Union state aid rules and guidelines still have a huge influence on how ferry services are paid for in Scotland.
The requirement to tender for the Clyde and Hebrides Ferry Service (CHFS) led Scottish ministers to change the structure of its ferry operations in 2007.
Teckal was developed through EU case law to allow contracting authorities to award a contract to a supplier without having to resort to a regulated procurement procedure.
Before CalMac was awarded the current contract in 2016, the RMT union’s legal advice, provided by a European procurement law expert, is that the exception could be applied to Scottish ferry contracts tendered by the Scottish Government.
QC said on behalf of the RMT that the rules leave the authority able to supply goods and services on its own and therefore not having to seek tender.
A spokesman for Transport Scotland said “It is common practice for a contract of this size, significance and complexity to be supported by specialist external advisers.
“Ongoing work is being done to support the development of the new CHFS3 [Clyde and Hebrides Ferry Service 3] specification and related due diligence exercise. This covers all aspects of the future CHFS arrangements from a legal, financial and operational perspective, including the potential for direct awarding.”
