41% more value in new Clyde and Hebridean Ferry Services contract – with information to come on local access to pre-tendering discussions

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Details and timeline for the new contract for the Clyde and Hebridean Ferry Services [CHFS[ were announced yesterday, 17th February, with the tender to be issued as a single contract. This puts to bed fears of the unbundling of the services into multiple route-cluster contracts. This could only have resulted in serial service failures with no operator having vessels appropriate to the range of routes and ports and therefore able, as CalMac routinely does, to shuffle the pack and keep a lifeline route running where a vessel is out of service.

The timeline given is:

  • 17 February 2015: Submission of contract notice.
  • June 2015: Invitation to tender.
  • September 2015: Conclusion of first negotiations and call for further tenders.
  • December 2015: Invitation for Final tender.
  • By end of  January 2016: Submission of final tenders.
  • End of May 2016: Anticipated award of the contract.
  • 1 October 2016: Proposed start of Public Service Operations

The tender is also to be conducted under the ‘competitive dialogue’ process. Basically, ‘competitive dialogue tendering’ is the provision of a minimum tender specification. Each bidder then has a series of independent discussions with the Scottish Government on their individual proposals as to how they might bring added value to the contract.

No bidder then knows what the other bidder is proposing. The process is designed to ramp up the offers – but can lead to the provision of the minimum with a bit of peripheral bling for the headlines.

Government commitment to local access to pre-tendering  discussions with potential operators?

On 9th September 2013, the Scottish Government issued a Prior Information Notice [here] of a two year tendering process to start on 3rd November 2014. This is the process that began yesterday, over three months late, on 17th February 2015.

That Prior Information Notice on 9th September 2013 came on the same day as the then Transort Minister, Keith Brown, gave an important governmental commitment in response to a parliamentary question from Hiighalnds nd Islands MSP, Jamie McGrigor.

This had asked about the Scottish Government”s specific plans for opening pre-tendering access to ferry service contracts to local authorities and local ferry action groups involved.

The response was that the Scottish Government planned to offer, across the routes, the same access to pre-tendering discussions with potential operators as the then Infrastructure Secretary, Nicola Sturgeon, had made available to the Dunoon Gourock Ferry Action Group in respect of any developments in the non-lifeline service between Gourock and Dunoon on the Clyde.

The Transport Minster said that this access would be decided by Scottish Ministers on a case by case basis, with ferry action groups on the routes for Islay, the Small Isles and Lochboisdale among those very keen to be involved.

Yesterday’s announcement made no mention of this commitment. It is not necessarily a matter for alarm amongst local ferry action groups across Scotland. A headline announcement of this kind would not be expected to go into this sort of detail – but For Argyll has already asked Transport Scotland for information on how this access to potential operators and pre-tendering discussions will work. They are to get back to us and we will publish the information when we get it.

Contract value and strategy

The new contract carries a substantially increased value over the current one.

In September 2013 CalMac were given a three year extension of their contract to operate these routes, to commence on 1st October of that year. This was worth £265M, or £88.3M per annum.

The government statement says: ‘Scottish Ministers will provide up to £1bn of funding to support the enhancement and development of these lifeline ferry services, in addition to fares revenue. This last refers to the additional amount the government pays to the operator for its Road Equivalent Tariff [RET] subsidy on ferry fares.

EU cabotage regulations have no changed, allowing longer contract periods. This has been introduced to encourage operators to invest in their routes, generally with an eye to new vessels – with contract time to return on that investment.

The new CHFS tender announced yesterday is for an eight year period, with a value of £1Bn, or £125M per annum. This is an increase of 41.4% per annum in the current contract price, although the UK has experienced very low inflation rates since September 2012.

The additional £300M in the pot seems generous – or strategic, in setting out to attract honey bees from elsewhere.

But whatever happens, and whatever each individual would like and would not like to see as the outcome to this tender,  no one will be able to use their vote in the Scottish Elections of May 2016 to express their response to it.

The Scottish parliamentary  election is on 5th May 2016.

The winner of this contract is to be announced at the ‘end of May 2016’

The SNP Scottish Government has serious and serial form in blatantly  keeping unpopular decisions on Scottish ferry services under wraps until just after an election is actually over, with those alienated by the decision unable to express their views in their votes.

The Gourock-Dunoon ferry service contract swerve

The Scottish parliamentary elections were held on 5th May 2011.

On 25th May 2011, the Scottish Government announced the news Dunoon did not want to hear. It confirmed that the Gourock0Dunoon ferry service would no longer be a vehicle and passenger service but a passenger-only service operated by a new subsidiary of CalMac, brought into existence to bid [successfully] for the contract. This was to commence operation on 30th June.

As the Government well knew,  this final decision would have substantially influenced the SNP vote in Dunoon and Cowal, had it been made public before election day.

‘Raiders on the starboard bow’ in Northern Isles ferry services contract

The Scottish Local Authority Elections were held on 3rd May 2012.The following day, 4th May 2012, the Scottish Government announced that Serco was the preferred bidder for the Northern Isles Ferry Services contract, in preference to the state owned NorthLink Ferries, part of the state-owned David MacBrayne Group-  and would operate the contract after the reqiured standstill period.

Serco, the giant multinational public sector corporate raider, went on to be banned from tendering for public sector contracts for a period, during a well-earned investigation by the UK Serious Fraud Office; and is a shadow of its former corporate self. It is therefore, though, fighting hard to regain traction in the hugely lucrative public sector hunting grounds.

Had this announcement been made two days earlier, it would again have affected the SNP vote, not only in the Northern Isles and on the north and east coasts but on the west coast.

Many on this side of the country had heard the rumours that Serco was being lined up for a profit-taking winning bid, undercutting the state owned CalMac with a lower cost bid likely to be achieved by reducing the degree of deliverability in CalMac’s performance on the lifeline routes.

Indyref-sensitive  postponement of Clyde and Hebridean Ferry Services tender

The award of the  Northern Isles contract to Serco and the rumours that it had given the nod for the Clyde and Hebridean contract, public distrust and suspicion was running high that the Northern Isles contract had been a Trojan Horse to get Serco to an inside rail position to strike for the big one.

The consequences of the award of the  Northern Isles award rumbled on, with Gareth Crichton of Streamline taking the Scottish Government to Judicial Review on the way the new tendering method had been deployed. This was ‘competitive dialogue tendering’ [now being used in this CHFS tender].

Crichton lost this action, with what, in our view, was a very limited exploration of the essence of the public interest issue in the opinion issued. He immediately launched another and different challenge at a different legal level.

Public anxiety on the future of the vital west coast ferry services was manifestly rising; and with the SNP government’s eyes fixed unwaveringly on the issue of how any issue might impact on the vote in favour of independence, the priority was obvious.

With fears for the impact on the indy vote very real, on 9th September 2013, the Scottish Government threw the entire process into the long grass, issuing a Prior Information Notice [here] of a two year tendering process to start on 3rd November 2014. [This is the process that began, over three months late, yesterday, 17th February 2015.]

On 26th September 2012 the position was amplified in a Transport Scotland announcement that:

  • the Clyde and Hebridean Ferry Services wold indeed be tendered as a single contract rather than unbundled;
  • tendering would not begin until ‘Autumn 2014′ [clear of indyref];
  • CalMac was to be given a three year interim contract;
  • the Scottish Ferries Review – the policy framework within which the tender specification and contract award would be made, was to be published by the end of 2012.

The decoy for the reason behind the extent of this major postponement  [which the government has nevertheless exceeded] and for the three year interim contract for CalMac was: ‘to ensure a robust and thorough procurement exercise is conducted that will enhance ferry services across the Clyde and Hebrides routes and consideration of adding new routes currently being delivered by local authorities’.

Taking the CHFS decision out of the 2016 election vote

Yesterday we saw the continuation of this political safety-first policy – a device of a kind employed baldly by governments everywhere.

The 2016 elections to the Scottish parliament are to be held on 5th May 2016. The announcement of the award of the huge CHFS contact will not come until sometime before the end of that month. Will the corporate raiders be back on that starboard bow?

Note: The photograph above was taken on 7th November 2015 by reader, Jamie Black,  as the MV Loch Seaforth CMAL’s new ferry for CalMac’s operations on the Stornoway-Ullapool service, arrived in Greenock.

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Related Articles & Comments

  • Here’s my wager – if Calmac are awarded it, the annoucement will be before the elections. If any others are awarded it, it’ll be delayed post election.
    Who’ll bet against me?!

    Hot debate. What do you think? Thumb up 13 Thumb down 6

    Jamie Black February 18, 2015 10:14 am Reply
    • Our shirts are staying firmly on our backs.
      Looks like a very sound bet.

      Like or Dislike: Thumb up 1 Thumb down 5

      newsroom February 18, 2015 12:33 pm Reply
  • Thank you for assuming theSNP wi win the 2016 election

    Like or Dislike: Thumb up 4 Thumb down 4

    Graeme McCormick February 18, 2015 2:46 pm Reply
  • One of the tender stipulations is the successful tenderer will have to charter the existing CMAL fleet.

    The charter terms and conditions of this tender stipulation obviously have a significant input into any tenderer’s proposal.

    These charter terms and conditions should be in the public domain to ensure that the tender is ‘open’, and does not have, what we all tend to assume,an inbuilt bias in favour of CALMAC’s retention.

    Of considerable interest was the fore-play to the tender ie the assurance,in 2013 that local Ferry Action Groups would have access for pre-tendering discussions with potential operators.

    It remains to be seen if Scottish Govt fulfills its assurance.

    Like or Dislike: Thumb up 8 Thumb down 2

    rob trythall February 18, 2015 3:27 pm Reply
    • Dictating CMAL rules out any opportunity for proposals with new vessels, embeds the current inflated costs, embeds the live aboard crewing arrangements, provides no opportunity to find running cost or fuel consumption efficiencies or increases in service speed. I’m sure the fares will be also be dictated.

      As newsie said, all it comes down to the marketing proposal and bling as there’s nothing tangible to go at. 8 more years of lipstick on a gorilla. No wonder the budget has gone up.

      Like or Dislike: Thumb up 3 Thumb down 3

      Jerry McIver February 20, 2015 8:29 am Reply
    • I wonder if, in additon to using the existing fleet, the winning bidder will also be required to operate under the Caledonian MacBrayne brand, which is virtually part of the scenery of the Western Isles. Doing away with that would be like doing away with Gaelic road signs.

      There is of course no reason why this cannot be done – there is after all precendent in livery branding of rail services.

      Like or Dislike: Thumb up 2 Thumb down 1

      Iain February 20, 2015 2:35 pm Reply
      • As the owner of Caledonian MacBrayne [Calmac], Scottish Ministers own the brand. So should they award the CHFS contract to a bidder other than Calmac they would almost certainly retain the brand under the operator for the duration f the contract.
        There is precedent.
        In 2012, when the Scottish Government awarded the Northern Isles Ferry Services Contract away from its wholly owned company, NorthLink Ferries [like CalMaC, part of the state owned David MacBrayne Ltd], the incoming operator, Serco [which has since been subject to a UK Serious Fraud Office investigation], the brand carried on but is now operated by Serco.

        Like or Dislike: Thumb up 2 Thumb down 2

        newsroom February 20, 2015 9:09 pm Reply
        • The Scottish Government have done the sensible thing with the national passenger train franchise, specifying a design brand for the trains that doesn’t change with a change of operating company – unlike the situation in England, where anarchy reigns and costs are increased by companies repainting the trains when they take over a franchise from someone else. However, the primary motive for the Scottish brand might be to reinforce a sense of national identity.

          Like or Dislike: Thumb up 2 Thumb down 1

          Robert Wakeham February 20, 2015 11:40 pm Reply
  • What is interesting is reading the list of routes, unless I am blind I cannot see Ardrossan – Campbeltown even as a summer only service.
    Does this mean the result of the three year trial has been decided? If so perhaps we could have a comment from our MSP’s and local Councillors as it has a strong bearing on the future of the area and tourism along with employment.

    Like or Dislike: Thumb up 3 Thumb down 2

    richard February 20, 2015 8:30 pm Reply

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