Official Report 837KB pdf
Our second item of business is an evidence session on ferry services in Scotland. Today’s session is part of the committee’s rolling scrutiny of ferry services, which will be continued over the rest of this parliamentary session.
I welcome representatives from Caledonian Maritime Assets Ltd: Kevin Hobbs, chief executive officer, and Jim Anderson, director of vessels. We go straight into questions, and I will ask the first of those. Can you confirm that the Glen Sannox met all the contract specifications that were agreed when it was originally ordered?
Sorry, I have a bit of a throat.
The two main contract requirements are speed and dead weight. The speed was achieved during the owner’s sea trials, and the dead weight was reduced from the original contract dead weight.
As I understand it, the speed was 16.5 knots minimum at 87 per cent of maximum revolutions per minute.
That is correct.
Was that achieved?
That was achieved.
Was that achieved by reducing the dead weight?
No, no. The ship itself performed at that speed. The ship was heavier than was originally estimated, which reduces the available dead weight.
So the ship was heavier than it was supposed to be?
Yes.
How much heavier?
We lost about 90 tonnes. I will come back with the right figure.
In the contract, a fine is leviable on the constructor if the ship does not meet the weight requirements—is that right?
Yes.
What would the fine have been for a 90-tonne—
I will have to refer back to the contract, but I can do that; I can probably look at the contract while I am here. We have to remember that, obviously, the contract was with the Scottish Government and the yard at that stage, but I can check what the liquidated damages were.
Had it reached the stage at which the ferry could have been rejected?
I would have to check that, convener, if it is okay just to check the figures, because it was probably right on that point. If you will allow me, I can go back and check that for you.
Okay. I am slightly concerned that the ship seems to be heavier. Fines would have been imposed on any other shipyard. Surely, as well, if it is heavier, it will use more fuel, will it not?
Slightly—sorry about my throat—slightly more fuel.
It will use more fuel. When you say “slightly more fuel”, Jim, do you want to be—I mean, I know if I load my car up with—
I do not want to throw out figures here without referring to the data from the sea trials, which I would have to look at to see what that difference in dead weight is compared with fuel and power. I am happy to come back to you on that.
It would be helpful to understand, if the ferry was plying to Arran, how much extra fuel it would need on each trip as a result of that, because that would give us an idea of the cost per trip, and you could probably work out the cost per year in extra fuel as a result of the ship being heavier—and the extra emissions.
It is important to note that the dead weight requirement that was set was set for the toughest conditions for carrying maximum freight. The actual dead weight that was achieved was around 791 tonnes. I am sure that that was achieved, but I will check that figure. That is for a fully laden vessel, full of heavy goods vehicles, for the toughest conditions, carrying maximum vehicles, whereas that ship on that route will carry mainly commercial vehicles and a mix of cars. The actual required dead weight for the service is much less than 791 tonnes, if that makes sense.
It sort of makes sense, but it does not make sense, because you reduced the passenger numbers, did you not, as a requirement of—
—the Maritime and Coastguard Agency—
Well, as a contract variation, then as a requirement of the MCA, did you not decrease passenger numbers?
Yes, we did; there were additional staircases.
It was for 1,000 passengers originally, and that went down to—
Eight hundred and fifty-two.
So we lost nearly 150 passengers—148 passengers. What about the vehicles? That number was 127 including HGVs, was it not?
The vehicle deck dimensions remained the same from when the contract was signed so, basically, the space that was available for the vehicles remained the same.
So there was no change in that.
No change.
Okay. Just looking at it from the outside, I am a little confused that we have ended up with a ferry that was not as originally specified but has just been accepted in. Whose agreement was it just to accept what was delivered? Was that yours, or was it the Scottish Government’s?
That is a joint agreement based on the operational conditions for the ship. The dead weight was set at what we call the design draught of 3.45m, but the ship can operate at 3.7m draught, so the actual available dead weight is actually much greater than 791 tonnes. If operating at a deeper draught in the water, we can carry even more than 791 tonnes, so we do not have any concerns about the operation of the ship and its ability to carry the full payloads of HGVs.
Hold on, now you are adding another dimension. Just tell me this: the ship sits deeper in the water—is that right?
No, it does not sit deeper in the water. The ship is designed so that it can sit deeper in the water.
The contract said it was to be 3.45m. What is it?
It is 3.45m, which gives the 791 tonnes, which was reduced from the contract figure of eight hundred and something—whatever it was.
The original requirement for the ship was a 3.45m draught, which is normal operation, but the ship is capable of operating at a 3.7m draught. That is quite normal for most contracts—it is the same even for the Islay vessels. You have a service requirement and then you have an even deeper draught that allows you to carry more dead weight. However, as you rightly say, if you carry more dead weight, there is a slight penalty when it comes to fuel.
Does 3.7m allow you to enter all the harbours that the ferry could be used at?
Not all of the harbours. The maximum draught was mainly for operating as a freight one on the Stornoway to Ullapool route, so that was why the requirements were set for a greater draught.
Basically, the 3.45m was born of Ardrossan. When CMAL and some of the other stakeholder councils are redeveloping ports at the moment, we are going for deeper ports to try to get them to modern standards, as I am sure you are aware, including for Uig to Tarbert, Harris. As it stands, the 3.45m was the limit to be able to operate the Glen Sannox into Ardrossan at every state of tide, whether neap tide or spring tide. However, as Jim Anderson says, if you are operating to a port that is deeper, the vessel can carry well over 1,000 tonnes of payload.
I will go back to the original question. From what you said, Jim, the ferry did not meet the original specifications that were laid out when it was supposed to be built.
For the dead weight, yes.
Which is quite a critical thing, I would suggest. Who made the decision to accept that ferry with that built into it? Was it CMAL, Transport Scotland or the Scottish Government?
That was a joint decision that we made at the regular meetings that we have, where we discuss all aspects of the project.
Who made the joint decision?
Who made the joint decision? Us, the operators in CalMac Ferries Ltd, along with the strategic commercial assets division team, Transport Scotland and so on. It is all the same people who attend the room.
From an operational point of view, the ship meets its requirements with that 791 tonnes of dead weight. When you sign a contract for those ships, you always allow a certain margin for all of that, because it is the most critical area of a ship’s design anywhere you go on the planet—it is about getting good control of that weight. A certain margin is always built into that.
I understand that, which is why the penalties are £5,000—or a certain number of pounds per tonne that is over, as I understand it. However, I am trying to work out whether, if the ferry had been built by anyone other than Ferguson Marine, those penalties would have been imposed.
All contracts are taken on a case-by-case basis.
So, maybe, maybe not. I am not sure that I am any clearer on that, so I might have to come back to you.
I have some very brief questions on the same front. The dead weight of 791 tonnes was the target in the contract. Is that correct?
That was less than the contract; the contract figure was 800 and something. I will refer to the contract in a minute.
You are just going to check whether that was within the flexibility in the margins.
Yes.
If that is the case, it would be within the specification in the original contract. We do not know that yet, but you will check on that this morning, is what you are saying to me.
Sorry, say that again.
If a dead weight of 791 tonnes was within the permitted flexibility, it would have met the contract specifications as originally outlined, because built into that was a degree of flexibility. Is that correct?
The 791 did not meet the contract specification. However, from an operational point of view, it was more than enough. The contract specification was set slightly higher.
Is it correct that the contract did not have within it a tolerance level and that it had to be on the nose?
Yes. When we say we made a decision jointly, we did make a decision jointly, which was off the back of knowing what that particular route needed.
If we pull a silly figure from out of the air that the dead weight was to be 200 tonnes, the ship would have been rejected, because it would not carry anywhere near what it needed to carry.
However, when you look at the heat maps of what is carried to Arran by any of the ships today or any that are likely to be required in the future, the 791 tonnes would still meet the requirement for that ship to be fully laden and still be within 3.45m.
09:30
Is that on the basis of the routes that the ship is intended to operate on?
Correct. However, if it goes to another port—let us say, as Jim has mentioned, on the Ullapool to Stornoway route—the ship can have a draught of 3.7m. The original spec said that the vessel could carry 1,271 tonnes, and we would be about 90 tonnes short of that. There is plenty of margin within the ship to carry what it needs to carry on the routes that it is going to operate on.
I will ask the question another way, as those just become numbers. All I want to know is that the ship is being delivered now—
Correct.
It is at variance from the original specifications.
Yes.
I would like to know where the restrictions are and where the ship can now be used. Are there more limitations on those vessels because of the current specifications, rather than the specifications that were set in the original contract? I am happy to get those details in writing but, ultimately, that is just numbers, and numbers alone are meaningless. What is meaningful is whether or not those two vessels can now technically do less if, at some point in the future, they were to be redeployed elsewhere to do other tasks.
In broad terms, a 90-tonne reduction in dead weight equates to two articulated, fully laden lorries. How you can operate depends on which port you go in to and how deep that port is.
Broadly, what we are saying is that, for the purposes of the ship being delivered and for the route that it is going to be on for the majority of the time or the alternative routes that it may be deployed on from time to time as a cascade, it will do what is necessary. It will carry what is required.
That is helpful, but I ask you to reflect on the basic point that I am making. Unless this is their bread and butter or their business, anyone listening to this meeting just wants to know whether the two vessels will be less effective on their current routes. We have a clear expectation that that will not be the case and that they will do exactly as was always intended, but they could be redeployed for other purposes within the fleet at some point in the future. Are there more restrictions on what they can or cannot do because of the variation in specifications?
Mr Hobbs said that there will technically be two fewer articulated lorries. That explanation becomes meaningful to someone, rather than the numbers that are flying about. It would be helpful if, either here this morning or in writing, we could get a meaningful explanation on that because, quite frankly, most people are just hearing gobbledygook. That would be helpful.
I can give some figures. Take an HGV, fully loaded—44 tonnes is the maximum that is permitted. If we take 14 times 44 tonnes, that gives us 616 tonnes. If we had 14 fully loaded HGVs on the ship, and the availability is 791 tonnes, we would have 791 tonnes minus 616 tonnes, which gives you the additional dead weight for your stores, your fuel and so on. From an operational point of view, we are more than comfortable with the 791 number.
Okay. I do not want to pursue that any further other than to ask a more general question, which is not related to dead weight. After signing contracts for vessels to be delivered, is it normal or routine that those who win those contracts will, at some point during the construction phase, approach their partner and say, “We believe that there is a case for a contract specification variation,” and then seek agreement with those who have given them the contract in the first place? Is that unusual or is it routine?
It is not unusual to have amendments to contracts in a shipbuilding contract.
Can you say a bit more about when that has happened in the past?
There could be change orders where you perhaps have had a change of equipment, so that the weight could grow naturally. If there is some added item on the ship—a winch or something like that—there might be a 10-tonne penalty. When you look at any change order for a ship, whatever that might be, there could be a time aspect for the yard to do some additional work. There could be a weight concern or a weight penalty that we would also have to consider. That is why, when you set your dead weight requirements, you always make sure that you have some margin.
Okay. I have no further questions. However, when we are having an exchange in the future, I urge you to make it meaningful to members of the public. For example, saying that there could be two less fully-laden articulated lorries on one of those vessels at another port, if it was deployed elsewhere, and that, in the context, that is pretty minimal would be helpful, because, with the numbers that are flying about, it looks as though this is way off course in terms of the dead weight. Again, it would be helpful to have something in writing that puts that in plain speech rather than doublespeak.
What everybody needs to know is that the operator, us as CMAL and the Government more widely had a discussion about whether it was acceptable, and it is acceptable for that route. It will have no negative effect on what can be carried on that ship on the primary route.
That is good to hear, and that is not lost on me. I had supplementary questions because we just had numbers flying about, which became meaningless to me, quite frankly.
It is not a simple, straightforward subject matter. That is why people study naval architecture.
Jim Anderson, to save you looking it all up, I think that I have the figures to hand. The vessel was meant to have a dead weight of 878 tonnes, with a tolerance of 10 tonnes. There were penalties of £5,000 per tonne for falling below that weight, up to a maximum of £250,000, which would have meant that it was 50 tonnes below the weight, down to 818 tonnes. At that point, the boat should have been cancelled, according to the original contract, because it did not meet the specification.
What I was trying to drive at is that the boat can carry less than was originally agreed—less than the contract was set up for—which means that it is not doing what it was expected to achieve. That, therefore, raises the question of whether you have value for money, in my mind—especially now, as you can have fewer passengers and fewer vehicles. It appears to me that we have ended up with a boat that does not meet the original contract, however it has panned out. We have not got what we paid for, and we paid considerably more than we thought we were going to have to pay. To me, the whole thing seems to be a complete confusion. I am going to leave it there, because I think that I have made my point.
Kevin Hobbs, I think that you specifically asked for the anchor chain to be retested during the trials—unless I have got that wrong. [Interruption.] I am being told that it was Jim Anderson who asked for it, so my knowledge of that was wrong.
Jim, you asked for the anchor chain to be retested, and there was going to be a quick fix, which would allow it to be workable by February this year, which is after it goes into service. We were told that anchor chains are not that vital but that they are part of a safety feature. Has it been fixed or will it be fixed before the vessel starts carrying passengers?
I hope that I can clear this up. During the first builder trial—the builder being Ferguson—the ship was taken out to sea before the final outfitting was done, to demonstrate that the propulsion system was working. That was a great thing to do after all those years, and it was really successful. At that point, nothing was formally presented, but this then happened during the owner trials, just recently, towards the end of the year. The anchors were lowered during the first sea trial, which was in February if I remember rightly. What we are interested in is whether we can safely lower the anchors if we have to do that for whatever reason. Some issues were observed when we were retrieving the anchors at the time—nothing too great—but, by the time that we got to the owner sea trial, we could see that the anchor chain was slipping more and more. Therefore, it was identified that we had to make a modification to the system.
So, has it been modified?
It will be modified. The update that I got just yesterday was that that will be in early February. We do not have the actual date yet, but early February is when the gypsies will arrive. As soon as we have the definitive date for that, we will plan the best time to carry out that work, alongside CalMac from the operations point of view.
Okay. I think that the latest that we have heard is that, subject to the toilets being fixed, the vessel will come into use on 13 January. It will then have to come out of service again to get the anchor fixed. How long does that take?
I asked that question yesterday. I am not quite sure, but I would put that kind of job at about two days.
It would be helpful to know how long it will take, so that people know what is coming down the chain to them. If you asked that question yesterday, you would not be surprised that I asked it today.
Douglas Lumsden will ask the next question.
I want to ask about warranties on the Glen Sannox components. I presume that most of those components are now out of warranty, because they were ordered a long time ago. Is that correct? How would warranties normally work, and how will claims be handled in relation to Glen Sannox and Glen Rosa?
As you rightly point out, the majority of the warranties for the components on the vessel are out of date, because the vessel was built over a period of nine years as opposed to two-and-a-half or three years.
Effectively, there is an overarching warranty on all shipbuilding contracts given by the shipyard, which means that the shipyard effectively stands over any warranty issues. Normally, if a component part breaks and is under warranty, the shipyard will go to the manufacturer and ask for it to be replaced or repaired. In this instance, it would be up to Ferguson’s to effect that repair, because the warranties are now out of date. Ferguson’s has to stand over the warranty of the physical build—the physical hull and the way it has been built—which is the same in any shipbuilding contract, but warranties for the component parts within the ship, which would ordinarily run for six or 12 months after first being used in service, have lapsed.
Even though the parts have not really been used in service, they have still lapsed.
Correct.
How long would the manufacturer normally allow for them to be delivered and then brought into service?
When the procurement team in a shipyard places the orders, it specifies to the original manufacturer when it anticipates that the ship will be in service. In this case, that would have been about three years after the contract was signed, in October 2015. Ordinarily, you would have a six or 12-month warranty after the ship entered service, but the fact that the build took another six years on top of that means that, in the main, the warranties have lapsed.
I presume that that is the same for both vessels.
It is even worse for the Glen Rosa, because its build will probably take 10 years.
Have any parts been taken from the Glen Rosa and used on the Glen Sannox?
I do not have a definitive list, but that has happened. It would happen with a normal contract, too.
Have those parts all been replaced on the Glen Rosa?
The Ferguson’s procurement team has the replacement of those parts in hand.
There are not hundreds and hundreds of parts that have gone wrong. By any stretch of the imagination, you could not say that the Glen Rosa has been denuded of all of its equipment. It is just the odd piece of machinery that has not worked properly. Instead of waiting for the manufacturer to manufacture a new piece, it makes sense to transfer a serviceable component from the other ship, so that that vessel can enter service as quickly as it can.
The key components that are under warranty are probably the propulsion system and the liquefied natural gas system—obviously, they are both the same thing.
There are warranties against almost everything: pumps and so on—you name it.
Is there anything that is obsolete in these vessels now, because of the time that the build has taken, which it might be hard to get replacements for?
An exercise was carried out to look at what was considered to be obsolete in the way of bridge equipment, which tends to be more software-related stuff rather than a pump or an engine. As you know, electronic systems tend to have a certain shelf life. That is the world that we are living in—after five or 10 years, manufacturers change something and bring in something new.
So, components have had to be changed, even though they have not been used, because they are obsolete already.
As I said, an exercise was carried out to look at what was considered to be obsolete. The obsolete elements were mainly bridge equipment.
Monica Lennon will ask the next question.
Good morning. We were recently told by Ferguson’s that it cannot provide a final cost or delivery date for the Glen Rosa. After all this time, how can it possibly be the case that those details are still up in the air?
09:45
There have been a lot of changes in the yard over the past few years, as everyone in the room is well aware. Last year, a new project management team was put in place, and a new planning team was put in place towards the end of last year.
I and the tripartite group have been asking when we can get sight of the plans for how the lessons learned from the Glen Sannox can be applied to the Glen Rosa and we can be provided with some established norms that demonstrate to us and all parties how the shipyard is going to execute those plans. At the moment, we do not have sight of those plans. We have been promised them by the end of this month, but at the moment we do not have them, so there is nothing that we can use to measure the yard’s efficiencies, if you want to put it that way, as we go forward.
The new planning team came into place towards the end of last year and a new project manager took over in quarter 1 or quarter 2 of last year, so there has been a bit of a revolving door in the business.
Are you feeling confident? It seems to me that you do not sound confident.
Am I feeling confident about what? Do you mean about being able to deliver the ship?
I am asking whether you are confident about delivery. From what you have said and what we have heard, it is unclear when CMAL expects the Glen Rosa to be delivered and at what cost. Are you able to give an update or any clarity on that?
Until we get sight of a plan from the shipyard, we will not be able to measure how it is going to execute that plan.
Let us take the length of cables that need to be installed in the ship, which is a simple thing that we can measure. We know that around 260km or 270km of cable will need to be installed. We need to see some clear evidence on the strike rates that the yard will achieve on the installation of cables, pipe systems and so on. That means that we need to see the plans. If, say, 250km of cable has to be installed, there has to be a strike rate every week and every month for how much the yard can install and how much it can terminate. As yet, we do not have those plans to comment on. We are expecting to have them by the end of this month.
When exactly? By what date?
At the end of the month—I think that we were told that we would have them by 31 January. I think that that was also in the letter to the committee.
Okay, so nothing has changed. Are you confident that the plans will be published at that time?
I cannot say that for sure at the moment.
That is a pity. I will hand back to the convener.
Can you clarify something for me? Who is the client? Is it CMAL, Transport Scotland or the Scottish Government?
The Scottish Government—SCAD.
Scottish Government economy took over the contract from us in December 2019, which was when Ferguson Marine (Port Glasgow) was incorporated as a company.
So, you are just a passenger on this journey.
We would like to think that we are more than passengers, to be honest.
Well, what you are saying is that the Scottish Government has the ultimate say. You do not know the details because you do not have them. If I was the client and I was buying a ship under a normal contract, I would make absolutely sure that people reported to me so that I knew exactly what was happening with the £150 million that I had invested—at the end of the day, that is what will be invested in the Glen Rosa. It appears to me that you are not in that position. I am trying to work out what role CMAL has. I asked that question when I was on the Rural Economy and Connectivity Committee, and I am posing further questions on the issue now.
We are still directly involved. We have the same management system and relationship in place as we do for the four ships that are under construction in the Cemre Shipyard in Turkey. The only thing that is different is that we do not own the contract. However, we still have eyes on the ground, and we are still supervising, inspecting and producing patrol remarks, owner observation reports and so on. It is the same system. We are still the people who ask the shipyard technical questions about the plans and provide a level of technical know-how.
So, you are not an arm’s-length organisation; you are a feature on the arm’s-length organisation.
We are directly involved.
What?
We are directly involved.
From day 1 of the new world of Ferguson Marine (Port Glasgow), we have been effectively contracted by the SCAD team, which is part of Scottish Government economy, to be its eyes and ears on the ground, because neither that division nor, indeed, Transport Scotland, has people who build ships. That is why we exist.
I hear that, but in 2006 or thereabouts, when CMAL was set up, it was meant to be an arm’s-length organisation to organise the ships. It now appears that you have been subsumed as part of the arm of the Government, which questions the whole issue of why CMAL was set up.
Only on that contract.
Only on that contract? But you have just said that it is the same for the Turkish ones.
No, I said that how we go about our business is the same and that the only other thing is that we do not own the contract.
Okay.
We are the contracting party for all other ships but not for that ship, because of the circumstances in which that shipyard found itself.
Okay. That is even more confusing.
The next question will be from Bob Doris.
Oh, it is back to me again.
If we look at the small vessels replacement programme, there is around £185 million wrapped up in phase 1. Six bidders came forward for that, and I guess that those bids are currently being considered. We are keen to know how those bids will be assessed and the criteria that will be used. For example, what weight will be given to factors such as price—in other words, the reliability of what the overall cost will be to the public purse—and the quality of the bids. Quality is a very subjective word. I am keen to know a bit more about how a bid will become successful on the basis of price and quality and about other criteria that may lead to the final outcome of the contract—or contracts—being awarded.
I will start and then I will hand over to Jim, if that is okay.
As you know, the small vessels replacement programme involves seven small vessels being replaced. That is phase 1. There is a phase 2, which involves another three vessels and is not out for bidding at the moment. We follow the procurement rules that Scotland has in place, and we go through the Public Contracts Scotland tender process. That is a two-phase process for these particular vessels. So, you have an SPDS, which in old money is a PQQ, and that was—
Sorry, but TLAs are great if you understand what the acronym means. Could you talk in full terms?
Okay. Let us boil it down. Basically, there are two phases to the bid. The first is a pre-qualification. We go out internationally and ask shipyards to show interest, and we have a pro forma that they fill out.
Has that been done? I am told that you invited six to bid.
That was done. There was a lot of interest in terms of people opening the document, but, ultimately, at pre-qualification, we received 13 compliant bids. We narrowed that down to six, which is where we are now, and we invited those six shipyards to tender the ITT. The ITT return date is—
What is the ITT? As it is the first time you have used the term, could you—
Invitation to tender.
Thank you.
The invitation to tender return date is 24 January 2025. At this point in time, the activity going on within the PCS tender website is the six shipyards that are involved asking us general and technical questions prior to them formally putting their bids in on 24 January. From 24 January, that is when the assessment starts.
That is context, because, although we may not have known the acronyms, we kind of knew the amount. It is more about how price, quality and other criteria are considered once those bids are finalised and put in for consideration.
The figure of £185 million was mentioned. Just be aware that that is not all to do with the ships—that is the overall contract. There are also some modifications to some of the ports and there is the need to attain the right amount of electrical capacity at the ports to be able to charge the vessels overnight, so there are three distinct elements within that £185 million figure.
That is really helpful. Thank you.
For the invitation to tender, or the ITT, the quality aspects of the tender make up 60 per cent. I will just check my figures—yes, the quality part is 60 per cent and the commercial part is 40 per cent. Within the quality part, we set the shipyards a whole host of questions to provide us with information in the tender response that we then evaluate. There is a big, long list. I do not think that you want to hear me read out every single question, but a huge part of it is about looking at the quality of the bid, the shipyards’ capabilities, their resources, their project management plans and all that kind of stuff.
With these ships all being electric vessels, the bulk will be in the equipment that is going on them. The steel is relatively straightforward. I do not know whether anybody is familiar with the small vessels that go to the likes of Millport and all the rest of it, but they are small ships. The steel is pretty much the smallest part of the whole price of the ship, whereas the biggest part will be in the propulsion, the battery systems and so on. That will form a significant part of our evaluation. We call them the makers, and the maker’s performance and the maker’s specification is a huge part of our evaluation. All the other things that we have been discussing so far, performance-wise—the speed, the power and the dead weight—will be evaluated.
In response to our ITT, the shipyards say, “This is the type of ship that we would propose for you, and here are the levels of performance, the type of equipment and the levels of service and support that we can provide.” There are a whole host of questions that we ask from a quality point of view.
I will be careful with my next question on quality, because every bidder must be dealt with consistently and equitably as part of the process.
In relation to quality, a bid on paper can be very different from what is delivered in the shipyard. In relation to the demand to build, is phase 1 of the small vessels programme more straightforward, given the other questions that we have been asking about other ships under contract? Does the track record of individual shipyards in delivering such vessels in the past come into play when determining who wins an award? Also, how can you compare the bidders when two of the bidders have never bid for work with you guys before—so they are new entrants from your point of view—while the other four bidders have an on-going relationship with you?
How do you balance the quality on paper with what the quality will be on delivery? Anyone can put on paper that the vessel or vessels will be good quality, but it is delivery that counts, within the cost envelope. How do you disaggregate that when determining quality?
We have a lot of market knowledge and we know a lot of people in the business. That is taken care of at the first stage that Kevin Hobbs described—the single procurement document, which is the old pre-qualification questionnaire.
At the first stage, when we selected the six bidders, we satisfied ourselves that, based on the information that the six bidders gave us and the types of smaller vessels that they have delivered in the past, they have the experience and capability to build those smaller types of ships for us.
Also, during the invitation to tender period, Jim Anderson and I have visited each of the six shipyards to assess their capabilities. As you rightly say, Mr Doris, what is put down on paper might not be what is there in reality, so we have visited every single shipyard. It is a bit bizarre to walk across the road to a shipyard that you are currently building ships in, but we have been to Cammell Laird in Liverpool and even to Asenav in Chile.
We have visited each of the shipyards and spent between a day and two days assessing their onsite capabilities, looking at the projects that they are currently doing and witnessing the quality of the work that they are doing for others.
10:00
Just to be clear, a significant hurdle has already been passed by all six bidders that are still in the game, so to speak—those that are about to put in finalised bids.
Yes.
So, you are comparing the quality of all six bids, but your belief is that all six bids will be of high quality. Then you have to determine what is best for the public purse.
Yes.
I have a final question about that. All the bidders will want to make sure that they are fairly treated. There will be a lot of commercial confidentiality in relation to each of the bids, because quality relates to the overall financial cost of the bid that they will put in. Are all the bidders getting equal access to all the data, the information, the paperwork—all the things that I can only imagine are really important—to the nth degree to the same extent as one another, so that it is a fair, open and transparent process?
Nobody has been given any special reliance on that. Basically, there is a package that goes out in the invitation to tender, which everybody gets—it is exactly the same. When questions are asked on the PCS tender framework, they are visible to all bidders, so that everyone is not asking the same question all the time. If a bidder turns up on day 1 and starts asking about how we want them to deliver the vessels because they are remote from Scotland, or stuff like that, that is very clearly visible, and everybody can see the answers that we give.
Even at this late stage, if I was acting on behalf of one of the bidders, and I was seeking additional information from you, I could request it, but the answer would be given to all six bidders. Is that right?
It would be broadcast, yes.
We have a series of supplementary questions on that subject. I will turn to the deputy convener, Michael Matheson, first.
Good morning. Jim Anderson, I was struck by the point that you made about the small vessels. Given that they are all going to have electric powered propulsion, you said that the real technical aspect is around the battery systems and the electrics that will go with them. Do you specify that as part of the bidding process, or does each of the bidders come forward with their own proposals on how they will deliver it within the vessel specification?
We do not specify any particular makers. We set a performance level in the specification for what the ship must achieve every day. We give all the information to all the bidders about the seven vessels, the routes that they will operate on and information on those routes—the time at port and when the vessels will be under way at full speed. The bidders go away with that information and then they design a ship and work out what the energy requirements for that ship will be.
We have already done some work, so we know where the specification should sit, but we ask the bidders to tell us about the ship that they would deliver for us. For this type of ship, it is all about the energy consumption on board the ship. All the bidders go away and look at that, and calculate how much energy they have to install in the ship—that equates to batteries. They then have to think about the type of batteries that they will propose to us—to CMAL and CalMac—that will perform for us over the 10-year lifetime of the ship. So it is for the yards to come back with their proposals to us.
How well established in the United Kingdom or the international market is the construction of electrical powered small vessels of this nature?
It is very well established now. Away back in time, we had the early experience of the three hybrid vessels: it was 2009 when we embarked on that project. We got a lot of information from the hybrids—they were not fully electric, but they had a battery element. There are now many ships of this type and size that are all-electric, so the technology is well proven now.
I have to remind everybody that there is a price to be paid for all the new technologies that we are looking to use to reduce our energy and carbon emissions. In the case of the batteries, everything now has a lifetime. That is the kind of world that we all live in now. If you maintained it, an old internal combustion engine would last for 30-odd years. Now, these kinds of technologies are forever changing, and we just have to accept that.
With the Glen Sannox and the Glen Rosa, we had the issues with LNG, new technologies being reviewed and so on. Is it your view that there is a well-established international market for electric propulsion vessels of this size and that there is good international benchmarking on what we need to do to ensure that the vessels work and are operationally effective? From your knowledge of assessing that, are you confident that you have that information and that the yards should be able to bid for contracts with a good grounding of operational information from vessels of this nature that are already operating?
The broad answer is yes. As Jim Anderson mentioned, the MV Hallaig, the MV Lochinvar and the MV Catriona were hybrids. Unfortunately, we have been overtaken by many fully electric ships in places such as Norway, Sweden and Denmark, so it is a well-known technology. In fact, as a clarification, despite what you probably heard at the Rural Economy and Connectivity Committee and in other areas, LNG is not a new technology, either. Thousands of LNG engines and ships were in operation when the contract was signed in 2015, but there has been a narrative—which, I am sure, you are very aware of—that says, “Well, this is completely new technology, so it is really difficult and really hard.” That is simply not the case. We are not groundbreaking in terms of LNG or battery-operated vessels.
There has been one learning that has come out of what has happened in Norway. The first fully electric ship was called the MV Ampere, which had some sisters. To provide a bit of context, I note that those were electric-only vessels. Where Norway has gone and where we are going is that there will be a small diesel generator on board, because island communities rely on daily services and we are worried about power outages. If there are power outages—which there are from time to time in remote areas—we cannot have a situation in which the crew turn up in the morning to the batteries not having been powered up because there has been a power failure, a storm or whatever. In the context of this particular project, there is an element of diesel, but it will be used only in extreme circumstances when, on a given day, the lifeline ferry service would fail if the power to the vessel overnight had failed.
That seems a sensible approach to take, particularly if that is the lesson that has been learned from the situation in Norway.
On your point about LNG, it is also my understanding that it is not a new technology. It might have been a new technology to some of the people who installed it at that particular point, but it was not a new technology in shipping in general. That is helpful.
I will move slightly away from that issue. Mr Hobbs, you mentioned the fact that improvements at harbours will be needed to allow the use of the new technologies, but improvements at harbours will also be needed to ensure that there is shore-to-ship power for diesel vessels. Will you give us an indication of how the project in Aberdeen with NorthLink Ferries is going?
Very well. We initiated a project about a year and a half ago. One of the big challenges with regard to power is the grid itself; it is not necessarily the technology around it. Broadly, you have to have power at the port, so you need to get cables to the location where the ship will be charged. You then need a bunch of transformers to get the power into an energy that the ship can accept, and, because of the increased energy that is needed compared with our original diesel-electric hybrids, you also need cable management systems at the ports.
As far as Aberdeen is concerned, the power is available at the port side. That has been done. The transformers are there, although they are still waiting for some small items. The piece that is not there at the moment, but which will be delivered during January, is the cable management system, which handles the cables to offer them up to the ship so that the ship can connect.
I was with the team up in Aberdeen the week before Christmas, and we are hoping that we will have a fully functioning shore-side power connection by no later than Easter of this year.
That sounds like good news. The other projects that are at an early stage include the replacement for the two northern isles freight vessels. Can you tell us what stage that project is at, because it is obviously extremely important for Orkney and Shetland?
We should have all the final concept design ready to go within this month. We have to populate the outline business case, and that will be done within quarter 1 of this year. In the latest budget, although I accept that the Parliament has not passed it yet, money has been set aside for us to initiate that project. We have internal discussions—we had them yesterday, actually—and we would need to go out to tender no later than June of this year to achieve a contract award by March of 2026, or within the next financial year. We are ready to go.
We are talking to Aberdeen harbour, we are talking to Lerwick and we are also talking to the operator, so everything is connected.
That is another good reason to vote for the budget, I would say.
Some of the most put-upon folk in recent times because of ferry movements for repairs have been the folk in Uist, particularly those at Lochboisdale with the MV Lord of the Isles. A replacement is also due for that. What stage is that at, please, Mr Hobbs? Can you offer any good news for folk in Uist?
Again, the outline business case has to be finalised, but the actual concept design was finished in December. The outline business case will run more or less in parallel with how I have described the northern isles freighter flex vessels. That is basically ready to go.
With any of those projects, there are three elements to consider: port A, port B and the ship in between. We have the concept design ready. Some restrictions and changes are required for the MV Lord of the Isles replacement because there is a restriction at Mallaig that means that our common platform of ship, which is the Islay ship, will not fit into Mallaig. It is 95m long and the concept design is for an 85m-long ship. We are talking with Mallaig as we speak and we will carry out a ground investigation this year and make the detailed design to replace the Lochboisdale facility, which is nearing life expiry, and relocate it to a small island called Gasay, which is just opposite the Lochboisdale facility.
Finally—
Sorry, Mr Stewart, I will certainly let you ask your final question, but just be careful. You have already stood on the toes of a couple of members who wanted to ask the questions that you have asked out of sequence, which is not clever. I will let you go on with the next question.
Will the MV Glen Rosa and the MV Glen Sannox provide better services for the people of Arran compared to the current situation with the MV Caledonian Isles and the MV Alfred? Are they better ferries?
They are much better ferries, and I think that people will appreciate that once they come into operation next week. Teaming up the MV Glen Rosa with the MV Glen Sannox was not the original plan of course, but that is what is going to happen and it means that the capacity is increasing. The one area that is still not resolved is the redevelopment of Ardrossan. That is the outlier in that project.
10:15
I want to ask about phase 2 of the small vessel replacement programme, which was recently launched by CMAL. Can you outline the key stages of the process and any timelines and details, as well as the expected budget requirement?
If you go to our website, you will see that we are going to carry out a series of public engagement events near the Sound of Barra and the Sound of Harris in the week commencing 20 January, when we will be kicking off more formally. That will be the start of the project. Our internal planning has us completing all the work—gathering information on service requirements, service needs, and so on, which will lead to a concept design and a business case—by the end of the year. From then, we will be looking at what the available funding might be.
At the moment, the funding for the small vessel replacement programme is not in place. As I said earlier, there is white smoke for the northern isles freighter flex vessels, the MV Lord of the Isles and some port projects, which have been brought forward from the next, say, five years. The programme was due to start on 1 April 2026, but it has been brought forward into 2025. If the budget is passed, those projects will go ahead. The small vessel replacement programme is logically outside that, because we will not be ready to go out to tender until the financial year that will start on 1 April 2026.
We will be pushing hard for any of our projects for which concept designs are in place, and for which we want to present outline business cases, to be the prompt for the money to be available—or not, as the case may be. As the asset-owning agency, we push every day of the week to get as much money as we can to replace the current fleet and upgrade the harbours.
What kind of estimates are you working to? I appreciate that you are still at a very early stage with the concept and building the business case, but could you give a rough idea of the budget requirement and put a figure on that?
We would really like to have the business case completed by the end of this year. If funding is available, that would allow us to move into the procurement phase, which typically takes 10 to 12 months. That would take us towards the end of 2026 before we could be in a position to put in place a contract.
At the moment, from a budgeting point of view, we are looking at somewhere in the region of £60 million for phase 2 for the vessels. We still have some work to do, because we are just commencing with phase 2, on what the shore infrastructure costs might be for the shore power for the routes. We are really just kicking off, but the cost for the vessels is in that kind of area.
I imagine that we do not have the numbers for the port side of things and power. I speculate that the cost would be in the region of £80 million to £100 million for the overall project for the three vessels and the associated works.
That is helpful for today. Could you say a little more about the public engagement work that is about to get under way and engagement with the trade unions? What consultation will there be about crewing levels and shore-side infrastructure? I remind the committee that I am a member of the National Union of Rail, Maritime and Transport Workers parliamentary group and of Unite the union.
We do not have any dates in the diary yet, but we will deal with the trade unions very early in all this. We have done that with all the other previous projects—we have had pretty regular discussions with the unions. We do not have dates yet, but that will happen in the very near future.
That is good to know.
I have a question about the four large vessels that will be built in Turkey. What actions will be taken by CMAL and Cemre to ensure that the four large vessels that are being built in Turkey do not slip and cost increases are minimised?
As we advised the committee in our update at the end of last year, delivery dates for the ships have been extended. Our current assessment is that the four vessels are about four months apart in production.
I will fly to Turkey this evening and will be back next week. We have a regular on-site presence there. Our site team includes people who are working on the electrical and mechanical elements, outfitting people, steel workers, the CalMac crew and the chief engineer. We have seven people involved daily in all aspects—including technical aspects and inspections.
The next big milestone for the Isle of Islay will be sea trials—the yard is heading towards that. At this point, I do not want to give a definite date for the trials, because there are so many systems that we still have to get over the line. Everything has to go smoothly, and I want to come back and report that we have all the systems over the line and that everybody is working hard together on the ships. A successful sea trial would give us an indicator of how much work is still to be completed on the ship.
Everybody is working very hard on the vessels. Yes—the dates have been extended from the original dates, but we are looking forward to getting some much-needed tonnage into the fleet this year.
Some rather extraordinary outlying events have hit during the past couple of years, which has not been helpful to anybody in the shipping world. I will go through them.
There is war in Ukraine and the steel plant that used to service the whole of Turkey with marine steel, which was in Mariupol, was blown to pieces.
There was also an earthquake in Turkey, and unfortunately tens of thousands of people died as a result of that. A lot of people had relatives in the area, and although the shipyard there was not officially closed, there were a lot of people missing for a long time, recovering their loved ones.
Then, of course, there is the Red Sea situation that has turned the whole container market on its head. Instead of everything coming through the Suez canal and being delivered to Israel, Egypt and Turkey first, everything is coming round Africa now. The ships are starting their milk rounds of deliveries in northern Europe then going back into the Mediterranean, which is unhelpful.
There is a series of issues that are indicators for why the project is running late. It is very difficult to criticise people on the back of external factors and geopolitical problems.
Thank you, Kevin. It is important to put that on the record. You have certainly outlined some significant challenges.
Can you say a word about the future of the project? Jim—you outlined the importance of having an on-site presence, so good luck with your travels today. What are the main tickets on the risk register that could put projects at risk because of delay and cost?
The smallest of items can set back a project—for example, unavailability of specialist engineers from the major equipment suppliers. Everyone is so busy with shipbuilding projects, and only a small number of companies supply propulsion systems, engines and batteries.
With all the madness that is going on in shipbuilding around the world, when one project slips somewhere, that has a knock-on effect throughout the shipbuilding industry. We see that as a challenge for all shipyards, not just Cemre. A yard might have planned to have an engineer to come in in week 2 of this year to do some activity, but the engineer might say that it will be week 4 before they can get people there. Despite all the best planning, such challenges can be thrown up.
We might get to a point where there are some small issues with the Marine and Coastguard Agency and the classification society, although there is an almost permanent presence from a classification society—in this case, Lloyd’s Register. The MCA makes regular visits to the shipyard in Turkey, and our site team is there all the time.
One small thing can add four weeks to a project. The ship could be pretty much finished in its entirety, but the toilet system could suddenly develop an issue late in the day. We track all the risks, but there could be just one small thing out of tens of thousands of things in a shipbuilding project that need to be considered. A ship is pretty complex when you think about it—almost like a floating village or a floating city.
We are aware of most of the risks that we have to look out for, and we think ahead. We have a really good working relationship with the shipyard, the classification society, the MCA and CalMac. Without doubt, I say that all the best efforts are being put into the project.
Thank you. I am sure that we will return to the themes of risk and resilience many times, but I will hand back to the convener.
Thank you. Mark—you have the next questions.
I have a follow-up question. I think that you have allowed a 3 per cent contingency for the four large vessels that are currently being constructed in Turkey. It was good that you put on the record some of the pressures and strains that exist at the moment. Is that 3 per cent figure adequate, or do you expect that it might need to go up? Will you need to use it?
I updated my budgets over Christmas and new year, and we are still well within that figure. We are still feeling pretty good about the overall budget cost.
When will you next be able to update the committee? You are flying out tonight. In your letter of 18 December, you talked about the
“Risks and uncertainties”
around the
“supply of equipment and ... specialist contractors”.
You will have a clearer picture of that when you come back.
Whether or not I am in a position to update you after this visit, I will be making another visit on the 27th of this month for a longer period. Around that time, I will be able to give a clearer indication of a sea trials date. It is not quite at that stage yet.
We have said before that if there is any significant movement—positive or negative—we will let you know. It is not simply that you will get an update only every three months; when we know that something has gone very well or catastrophically wrong, we will give intermediate updates, as and when required.
We will look forward to the good news.
You have already indicated that you are going out to public consultation. Would not it have been better to consult the unions in advance of that, particularly around aspects of crewing, when it comes to the Islay vessel?
The first part of the process is to go out and meet the ferry users. We will communicate with them and have an open discussion about needs and about the assessments that have been carried out by CalMac and Transport Scotland of the level of service that is required. The initial discussions are about numbers of passengers, the number of vehicles and the timetable. It is a very early discussion that is the first building block in all this. We will take that, then move forward on discussions with the unions. We will not really have anything to discuss with the unions until we have an idea of the type of vessel that we have to provide.
The unions represent the workers who will be running the boats and the services. Would you not expect them to have insight into how services could better meet the needs of communities? That is their job—it is what they do every day.
We are in dialogue with the people who operate the ships day to day, and we are informed about the things that they see. That work feeds into the public engagement events. That is not a discussion directly with the unions, although people will be union members, but we do consult the people who are operating the ships and are there every day. They are the most important people.
10:30
I will briefly go back to the question about liquefied natural gas propulsion. There has been a lot of discussion in the press about whether the carbon emissions are higher or lower, and there was a discussion earlier about the weight of the vessel and everything else. I take it that neither the Glen Sannox nor the Glen Rosa will be part of the UK emissions trading scheme, because of their weight. Is that right?
The emissions trading scheme is forever being modified but, at the moment, domestic ferries and lifeline ferries are outside it. That is the situation as it stands today, but that does not mean that it will prevail forever.
If they were in the ETS, there would be MRV—monitoring, reporting and verification of emissions. Should you be doing that anyway, independently, then we could avoid discussion in the press about whether there are higher carbon emissions? Should emissions be independently monitored and verified, as would be the case if the ships were over 5,000 tonnes?
That happens already in the annual accounts and the environmental, social and governance reporting. Basically, every ounce of carbon is already measured in respect of emissions. What we are embarking on at the moment is an attempt to understand the carbon footprint of building ships and ports, over and above what is, in effect, blown up the stack. We are in that process. We employed somebody last year specifically to look at all that stuff for us. The answer is that we are doing it and it is measured—CalMac measures it.
Is that done independently and is it independently verified?
No.
Why not?
It does not really need to be, as far as I am concerned, because CalMac knows what it is buying and what it is using.
That would avoid all the conjecture about whether carbon emissions are higher or lower.
It appears that you are not getting an answer.
I am not trying to be rude but, you know, I mean—
CalMac has a target for reducing carbon emissions, and that will be part of the national carbon accounts for transport and reduction of emissions. At some point, all this stuff has to be verified.
The fuel consumption on board the ship is logged, so there is an actual verifiable figure on board the ship that lets us know how much fuel it is using per day and what the operation was that day, as well. The figures are all built into the system.
What is slightly irritating for us is that, whether we are talking about LNG or just general carbon, there are many ways of measuring emissions. With ships, you can go from well to wake, or you can go from refinery to wake—there are lots of ways of doing it. As far as I can see, the narrative at the moment involves a belief that marine gas oil turns up in the UK as if by magic. Nobody is measuring that. Yes—20 or 30 years ago, a lot of it would have come from the North Sea, but it absolutely does not any more. People have started quoting that stuff is coming from Qatar, but where do you think the fuel in your car comes from? It does not come from the North Sea any more, that is for sure. It probably comes from Nigeria, South America or America, but nobody is calling that out.
Surely that is the point of the emissions trading scheme—you have a verifiable and monitored system in which there is agreement on what the emissions are, and you take into account not just what you are burning on the ship but where it comes from. If it comes from Saudi or wherever, you might have a higher carbon footprint.
Yes—that is what is done.
Right.
It is not done independently because CalMac knows what it is buying and what it is burning every day.
Okay.
Before we move on, I will just comment on the reports that the committee gets. I know that the committee is thankful for those, and they seem to be quite fulsome. From a personal perspective, I am grateful, and I am also grateful from the committee’s point of view that you will update us if things are going right or wrong. That is welcome news. I will leave it there.
I have a quick follow-up to Mark Ruskell’s question. There was a recent report about MV Glen Sannox’s carbon footprint. Can you, today or later, provide us, in writing, with carbon footprint figures including per passenger, per car and per HGV and make a comparison with the other vessel that it is replacing?
We could provide that to the committee later. That is a bit of a difficult one, because a lot of the ships go round more than half empty in winter, so how do you make the calculation? The best way to calculate that is, I think, to look at the carbon footprint of the car-carrying capacity of the MV Caledonian Isles versus that of the MV Glen Sannox, for instance. That can be calculated.
That would be useful, because we have heard details about how methane slip might add to emissions for example. It would be good if you could provide that to the committee.
We have touched on port infrastructure, which I want to return to. On the battery vessels that will be procured, how much work will have to be done to get the port infrastructure ready? What assurances can you give that that will all be in place before any new battery vessels arrive?
In simple terms, we cannot give such assurances at the moment. We engaged about two and a half years ago with Scottish and Southern Electricity Networks and grid capacity is a problem. It does not really matter whether we are talking about ports or service stations. Grid capacity is a major issue in the UK.
We are aware of—let us call it—issues in relation to some of the ports that will have the small vessels and whether electricity will be available. The transformers, the cable-handling devices and all the rest of it can certainly be provided, but getting the prerequisite amount of power from the grid to the port is a problem.
I will take one example, which is a complete outlier. Lochaline has a potential problem. The grid is not getting the power to the port. I believe that 100 miles’ worth of new pylons are needed all the way through Scotland up to Fort William to enable that to be reinforced to give Fort William, Lochaber and Skye the amount of power that is needed in the future, and we are part of that mix.
In all honesty, I cannot give you a 100 per cent guarantee that, when every one of the vessels turns up, they will be able to connect to the grid.
Is it really wise to advance the procurement of battery vessels when the infrastructure is not there to support it? You cannot give us any assurance that the infrastructure will be there. You mentioned diesel generators. I guess that there is a risk that it might be diesel producing the electricity to charge the batteries.
Or Aggreko generators or something.
We have to face into that. We are doing everything that we can with SSEN to make sure that the power is there. We have seven different ports, and because all those ships have a broadly common platform, we can make sure that we can modify where the electricity will be earlier versus later, but I cannot guarantee that all seven will have the power.
Structurally, the vessels are being designed to last 30 years. Jim Anderson alluded to the fact that current batteries have a lifespan of up to 10 years, whereas for traditional propulsion systems, a main engine would be put in the vessel for the full 30 years. We are, within the business cases, having to say to the Scottish Government and Transport Scotland that, basically, we need to allocate funds every 10 years to replace the batteries on the vessels.
Ultimately, if we do not have power at a particular port for the first year or 18 months of the vessel’s life, that is a very small percentage over that 30-year period in which it might be carbon burning as opposed to electric. A year and a half of 30 years would be 5 per cent of its life. One or two of them might need to have an alternative fuel source.
What cost estimates have been done in relation to how much will be required to get the ports electrified to support the new vessels?
We have all the numbers.
You have all the numbers.
Yes. There are quotes, as well as what are called firm quotes and non-firm quotes. How can I explain this without getting told off by Mr Doris? [Laughter.]
A quote is when SSEN gives an outline of when it thinks that the power could be there and how much it would initially cost. A firm quote is the most expensive, because it involves feeding in power from two or three different directions, so that if there is a problem with the grid—for example, if the power cables go down due to a storm—there should hopefully be another source coming in. That is very expensive, because it demands whole new pylon systems coming into ports. A non-firm quote is when there is only one source coming in, and that is what we are going for. That is the middle road, really.
There is the platinum standard, and we are going for the gold standard. We are not going for the bronze standard, because the bronze is nothing.
How much is it going to cost, then, to get the ports up to what is required?
We will write to you separately on that, because it is a different amount of money for each one of them. Basically, there is the port infrastructure itself and how much it takes to get the power to the port; I do not have those numbers in my head times seven—for the seven locations.
Okay—it would be good if you could write to the committee with those.
We should bear in mind that it is not just the small vessel replacement programme—over and above that, all the major ports were asking to be electrified overnight for when the ships are actually alongside, as in Aberdeen, which Kevin Stewart asked about earlier. In the future, we want every port to have the prerequisite power so that, instead of having diesel generators running close to the shore overnight, which gives out emissions and noise pollution, we can plug in all our vessels, big or small.
Just for simplicity, it would be helpful for the committee to know, for those quotes, which ports will have overnight power supply, and which are mandatory—that is, the boats that use those ports will need that power supply to charge their batteries. That would be a useful breakdown. I am sorry to jump in there, Douglas.
No—thank you, convener.
That will be the seven plus the three in phase 2.
Moving on slightly, but still on port infrastructure, I turn to LNG storage. Is there any budget anywhere to provide LNG storage for the Glen Sannox and Glen Rosa?
Yes, but we cannot install it at the moment, until we know which port we are going to.
Yes—whether it is Ardrossan or Troon.
It is a mainland port, but the way that these things are constructed means that, once we construct and install them, and get them down to the temperature, we cannot move them anymore. It is not as simple as saying, “Let’s get something, put it in Troon and then move it to Ardrossan later.” At the moment, we are in a bit of a catch-22 situation.
Ultimately, what was envisaged was that if Ardrossan was our port—obviously Ardrossan is not our port, and neither is Troon, for that matter—we would be putting the permanent port solution in place there now. However, we cannot have a situation in which we put in a permanent solution and then we have to scrap it all and replicate it a second time in several years’ time.
When will the decision be made on where the permanent port will be?
When there is a solution to Ardrossan.
Are you responsible at all for that, or is it down to Transport Scotland or someone else?
It is owned by Peel Ports Group—it is the one private port in the lifeline ferry service network.
I understand that bit, but who is negotiating with Peel Ports to see whether the permanent solution is going to be there or somewhere else?
We are the eyes and ears, and the advisers, for Transport Scotland.
When will you be making that decision, then? When will you be advising Transport Scotland of when—
We cannot force Peel Ports to sell a port, so I cannot give you a date, but there are active discussions on-going.
I am just trying to get back to when there will be a decision on LNG storage, and of course that decision is not going to be made until that is done, but there seems to be no timescale in place.
It is frustrating for you and it is frustrating for us—and, I guess, it is frustrating for the communities.
It is frustrating for the users.
Absolutely. I am sorry that I cannot be more definitive. Again, we could write to you if there is any white smoke on that front in the future.
It has been on-going probably since 2018, when it was identified—
No—since 2014. A mere 11 years.
Since 2014—that is even longer. So there we go; we are into 10 years of long and protracted negotiations.
I am looking around to see whether there are any other committee members with questions.
As there are not, I go to Sue Webber. Good morning, Sue.
10:45
Thank you very much for the invitation to attend. Before I come to my other questions, I will pick up on what Mr Lumsden was talking about. As far as I am aware, the Ardrossan port project is trying to get agreement between Transport Scotland, which you have said you are advising, North Ayrshire Council and Peel Ports as to the cost apportionment of the tender process. Where are we with that element of those discussions?
In the middle of nowhere at the moment. My understanding is that the minister will make an announcement on that in the coming months. I cannot say; I genuinely do not know.
This is what I am trying to say. You say that you are advising Transport Scotland, so who is driving the timeline and the dragging of the decision or any movement on the project in terms of the tender process and the start time of the project?
It is slightly tricky. As you say, the tripartite is Transport Scotland providing some money, Peel Ports owning the port and providing some money, and North Ayrshire Council being a partner with Peel Ports and providing some money. At the moment, let us just say that those amounts of money are ebbing and flowing between the three parties, which makes it very tricky.
We will just have to wait. It seems an awful long time.
I want to go back to something along the lines of what my colleague Bob Doris spoke about. I am from the city, and I find it difficult, as I am sure many people do, to really understand what the ferry services mean to the islanders and how critical they are to their daily lives.
For context, I am the ex-convener of the Education, Children and Young People Committee, so I am deeply concerned to learn that there are 14 young people who live on Iona and go to Oban high school but who will no longer be able to attend school five days a week. They will only be able to go to school three days a week, which is down to the fact that the aid to navigation—ATON—at the Bull Hole is not functioning. That means that the ferry services can operate only in daylight hours. It also means that any Iona resident who needs to go to the mainland needs an overnight stay, whether it is for the dentist, hospital, banking or all sorts of things that I can just get on a bus to go and do. That is having a massive impact.
I gather that the ATON should be inspected every six months, but I have seen the pictures of what it looked like in September, and there is no way that anybody got to the top of that to do that inspection. I am perplexed as to why we are in a position where we are waiting on a suitable work boat to deploy the new buoy. The timelines and those small things make it absolutely catastrophic for that community. What might you want to say to those families who are living on Iona and to those 14 children who cannot go to high school with their pals?
None of us in CMAL or CalMac comes to work every day to mess up an island community. That is for sure.
It is true that that particular aid to navigation has failed. We recognised when it failed. We ordered the bits of kit that were needed to replace it. It will be replaced in a slightly different fashion and not sat on top of the rock any more. It will be a buoyed solution. Contracts or orders were placed throughout the world to consolidate all of the prerequisite parts. Those are in the UK now, and I am hoping that, today, they are in or close to Oban, in a place called Gallanach, where one of our long-term contractors is able to assemble what is needed and then look at weather windows to get out there and do what is needed.
We are not sitting on our hands doing nothing. Things go wrong from time to time. It is not the sort of thing that you keep on the shelf. We keep a lot of major equipment on the shelf in case equipment fails, but this type of situation is a bit of an outlier because it is not common. We keep fenders and navigation lights—not navigation buoys—for all our ports in stock, but that particular kit is a complete outlier. I do not want to get into the details of this, but that particular aid to navigation is a category 2 aid, and it is not compulsory.
That aside, I have seen the images of what it looked like. From what I saw, the six-monthly inspection programme had not been taking place. It is a real shame that we have come to this critical—
Through freedom of information, we have been asked to show the maintenance records—the inspection records—and that is what we will do. It has been inspected.
As I said, we do not come to work to mess up island communities. Our sole purpose in life, in every respect, is to make sure that, with the money that we are afforded, we give the best possible services that we can to every island.
As I said, I am just trying to bring the issue alive, so that people can understand what the ferries mean to communities.
Can I go back to some of the procurement decisions? Is that okay, convener?
Please say that again.
Am I okay to carry on with other questions?
Yes.
As someone who is familiar with the PCS system, having worked in healthcare and submitted contracts for 30 years, I am curious. You spoke about quality being 60 per cent and commercial being 40 per cent. Is there a weighting for sustainability in there, at all? If so, what proportion would that be? To what degree are you allowing variations on contracts? You also mentioned that you had visited the six sites. What influence do your visits have on the decisions to award the contracts?
The visits were really for us to verify that everything that was presented to us during the SPD stage was the case—that the shipyards were who they said they were and were doing what they said they were doing. We were very comfortable with what we saw at all six shipyards.
What was your other question?
I was asking about a sustainability weighting. We have heard a lot from colleagues about everything in the net zero space. When I used to submit contracts, there was a question about sustainability, and that was given a weighting.
We build that into the technical specification for the shipyard—that is not just about sustainability but about the performance of the vessels. There is a weighting there, too, for the—
You said that you had everything specifically—
We have a breakdown of each weighting for each component.
You mentioned putting in a spec. Do you allow for variations, or does everything have to be as set out? What degree of variation do you allow?
We put in quite a detailed specification, but it is really about performance. If a shipyard wants to deviate from the specification, it has to inform us why it intends to do that, so that everyone is basically on the same page when it comes to—
Someone could give you something that is better than your specification, if they wanted to.
Yes. That is part of our evaluation. Hopefully, we are improving every year as we go forward. We have had a lot of input from procurement specialists, including on the legal side, on how we evaluate and on how we make clear our criteria when we do the evaluation. For example, if someone gets a score of 7 or an 8, that is against a clear set of criteria.
Do you give them that feedback on award?
Yes.
You said that the deadline is 24 January, but when are you looking to award the contract?
By the end of March.
Okay. Thank you.
There are just a couple of final questions from me. Kevin Hobbs, there has been discussion about a member of CMAL who was employed by Ferguson Marine and how that was funded. Specifically, the operations officer was transferred across, I think—or was he still paid? I am talking about Andy Crossan. Will you explain that to me? I am not sure that I followed what the Auditor General for Scotland said about that or what has happened.
I can tell you what we know but, for obvious reasons, I will not go into specifics in relation to people and human resources in CMAL.
When David Tydeman arrived at the yard—in February 2022, I think—he approached Jim and me quite quickly and said, basically, that he did not think that his team was strong enough and that he wanted to second someone. Originally, he asked for Jim, and I said, no, thank you very much.
Without going into specifics, we agreed to second a person over to Ferguson’s and a formal secondment agreement was signed at that time, which was towards the end of February or early March 2022. Effectively, the agreement was for CMAL to continue paying that person. We are part of the pay policy unit, so we cannot give people bonuses or vary outside of pay policy, but the arrangement was that, because that person was being seconded, Ferguson’s would, through its payroll, give them an uplift for the work that they were going to undertake. That was very clear and laid out in a secondment agreement.
Everything basically went pretty quiet from that point onwards. There was a point in the middle of the secondment contract when there were some hefty accumulated holiday periods. Those holiday periods have to be taken within our own HR world within CMAL. That person took about five weeks’ holiday. My understanding is that that was paid separately for that person to continue working within Ferguson’s.
Just help me out here. If you second somebody, they are still employed by you. Is the money that that person cost paid to you for you to pay it to them or is it paid directly to them from Ferguson Marine?
No, it is paid directly from us. The original contract is paid from us. There was a top-up, which was paid through the Ferguson’s payroll, which was noted in the secondment agreement. If you look at the section 22 report, which is what you are referring to when you say that you are confused, that is the £36,000 annually, which is the first line of that section 22.
We then fast-forward to David Tydeman being dismissed. I was approached by David Dishon, who was at the committee before Christmas, as the accountable officer. He came to me and said, “What do you know about the arrangements that were made in regard to Andy?”
Sorry, I missed that. Was that before Christmas this year or last year?
No. It was in the summertime of last year—2024—when David Tydeman lost his job. A week or so later, I was approached by—
Sorry, I thought that it was earlier than that.
When was David—
Andrew Miller told us that the search for a new chief executive started on 30 November.
I do not have a clue.
That was 2023.
Maybe.
Just to clarify, before Christmas 2024, you were approached by David Tydeman. However, he had gone by then. Is that correct?
No, no, no. Basically, David Tydeman asked for a secondment agreement in February or March 2022. That was a formal agreement between CMAL, Ferguson’s and the individual. If there was a variation to that, it should have been brought forward by Ferguson’s, which should have said that it wanted to change the arrangement. That never happened.
David Tydeman lost his job some time in the middle of 2024, I think. A couple of weeks after that, I was approached by David Dishon, who was the chief financial officer and then became the accountable officer. He asked whether I could tell him what arrangements had been made in relation to that secondment agreement. I just got the secondment agreement from a file, printed it, handed it to him and said, “That is what it was.” Then he asked whether there were any formal variations to it and I said, “No, never.” That is when, effectively, I found out that private arrangements had been made between CMAL’s employee, Ferguson’s and, I think, probably personally, David Tydeman.
Was that agreement to pay money to a company?
No, the secondment agreement said that we would continue to pay Andy Crossan his full salary and that there would be a top-up that was paid through the payroll of Ferguson's for IR35 purposes.
11:00
You were surprised when you heard that he was getting more money than you thought that he was getting.
I was surprised, yes, and there were other emotions. Let us just say that I was not very happy, and I do not think that Jim Anderson was very happy either.
Where is Andy Crossan now?
I do not know. When he left Ferguson’s, he basically decided to retire. He was on the cusp of 67.
Did he end his secondment or did Ferguson Marine end it?
Ferguson Marine ended his secondment and he came to us and retired.
He came back to you and then retired.
Yes—well, I say that he came back to us, but he did not ever set foot in the office to work again. He retired.
It just seems a bit strange. I cannot really follow what happened or how it all happened without anyone knowing about it, or how an organisation has allowed somebody to move across so that they do not have to form part of the public pay awards process. It seems odd.
It was all completely documented and legally checked, so, for me, it is not odd. It is a secondment agreement. However, if individuals, whoever they are—whether they work for a company or are employed as individuals—do not say what is going on, I cannot know what is going on. I have not got a crystal ball. If I did, I would not be sitting here because I would win the lottery every week, wouldn't I?
I understand that, but what I would say is that, if someone is seconded, and additional money is being paid to that person by the person that seconded them, and the secondee’s company does not know about it, I think that that is quite odd.
So do we. I am not saying that it is anything other than odd, but I do not have a crystal ball. The contract says that any variations need to be exposed, but that did not happen.
My final question is for Jim Anderson. I accept Kevin Stewart’s point that we have ended up with a better boat than we had before in terms of serving Arran. However, as I understand it, we now have a heavier ship that is carrying less cargo and fewer passengers—although it is able to carry more cargo and passengers than it normally does, but that would mean that it would sit deeper in the water, which would mean that it could not get into other harbours—and is using more fuel, with a greater carbon output. Is that an accurate summary, or have I got that wrong?
That is not completely accurate.
Not completely.
We have achieved a vessel weighing 791 tonnes, which is more than adequate for the needs of that route and other routes. If we take what that ship can carry in the way of HGVs and fuel, it more than covers the worst case at 3.45m draft. The original dead weight of 877.95 tonnes was not achieved, but that included a degree of margin, which is always quite a sensible thing to put in.
The ship does everything that it needs to do at the 791 tonnes.
Okay, so my comment is, if that had been known and designed in as part of the original contract specification, other yards could have been considered in the tender. However, that was not the case, and they had to work with that tender, and you have accepted a compromise.
When the original ITT went out, it asked for that same dead weight. We do not know what we would have ended up with if we had gone to another shipyard. Again, estimating the weight of a ship is critically important, and probably the hardest part of the job of a naval architect is to estimate the weight precisely to the kilogramme, which is why you always allow a margin.
I think that the margin was 10 tonnes. I look forward to seeing whether the ones that are being built in Turkey are given the same leeway as the Glen Sannox has been.
I thank you for attending for this session—which has been slightly longer than we anticipated—and for agreeing to come back to us on various bits of evidence.
We will have a five-minute suspension before the next item.
11:04 Meeting suspended.Air adhart
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