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Good morning. Paragraphs 104 to 109 of the report, starting on page 45, outline how the Scottish Government has fundamentally changed the arrangements to complete the vessels since the shipyard was brought into public ownership in December 2019. That includes the appointment of Caledonian Maritime Assets Ltd as its technical consultant.

During the Public Audit Committee’s evidence session with the Auditor General for Scotland on 28 April 2022, he commented on the new arrangements, stating:

“There is no denying that the arrangements are unusual. That paragraph also notes that Transport Scotland no longer has a role in the delivery of the ships. That is quite distinct from where we were.”—[Official Report, Public Audit Committee, 28 April 2022; c 37.]

Under the new arrangements to complete the vessels, CMAL has been appointed as the Scottish Government’s technical consultant and Transport Scotland no longer has a role in the delivery of the ships. Why were those decisions taken? What work was undertaken to assess the risks associated with the change in roles?

Okay. You do not think that there is any conflict of interest in CMAL’s revised role.

Finally, at what stage in the procurement process did the Scottish Government, Transport Scotland and Scottish ministers first become aware that FMEL was unable to offer a full builders refund guarantee?

At what point did ministers become aware that the BRG was not in place?

We just want to know when everybody actually knew this. Last week, I was sitting here saying that all this might have been rushed, but obviously there is a question about whether they were trying to rush it because an announcement was going to be made at the yard at the end of August when CMAL was still in negotiations. I just want to try to clarify the point at which each—

Okay. Thank you.

In your opening statement, you said that you accepted all the recommendations in the Audit Scotland report. Can I double check that that is the case? Are there any recommendations in that report that you have any reservations about?

Paragraph 105 on page 45 of the report states:

“in March 2021 the Scottish Government finalised the arrangements to fund and manage the vessels ... This included replacing the existing fixed-price contract between CMAL and FMPG with a new contract (for each vessel) between itself and FMPG. The Scottish Government is committed to paying the additional vessel costs, regardless of the final price.”

You have just said that you are looking for something at as low a cost as possible. Is it normal for the Scottish Government to hand a contractor a blank cheque?

I have a wee question about the Erik Østergaard email that was sent on 26 September. He made it quite clear that the contract should not have gone ahead. In the evidence that you have given today, you have referred to CMAL as the expert in shipbuilding. Why would its recommendations have been ignored?

So, even though all the issues were handed to the ministers, they did not have an in-person meeting to discuss it with the shipbuilding experts.

On 8 October 2015, an email was sent to Derek Mackay and Keith Brown. The sender’s name is redacted, as is a list of other people who were copied into the correspondence. It states that the

“DFM approved the financial implications of the contract award prior to the announcement by FM on 31 August that FMEL were ‘preferred bidder’.”

It goes on to say:

“it is clear that the Board of CMAL are still concerned”.

At the end, it asks for the minister’s confirmation that he is aware of the issues and is

“content to give approval ... to proceed.”

It also asks whether:

“the Minister wanted to speak to a representative of the CMAL Board”.

Is it fair to say that it was the Deputy First Minister who was made fully aware of the financial implications prior to the announcement by the First Minister and that it was him who authorised the contract to go ahead?