Review report

Lawyer finds no evidence of fraud in ferries contract

Glen Sannox ferry
The ferries contract subject to allegations of rigging

A senior lawyer has found no evidence of fraud in the procurement of the delayed Ferguson Marine ferries.

Barry Smith KC conducted a review of the process after a BBC Disclosure documentary last year alleged the process for awarding the £97 million contract may have been rigged in favour of the Port Glasgow shipyard.

He found that the yard did not win the contract to build two public ferries through fraudulent means, although there were a series of “missteps”.

Caledonian Maritime Assets Limited (CMAL), the procurement agency, commissioned an investigation into the awarding of the work to Ferguson.

The Glen Sannox and the newly named Glen Rosa are due to be delivered five years later than planned and costing more than three times the initial price tag.

Mr Smith’s findings, published yesterday, concluded there was no evidence of fraud but he said: “That is not the same as saying that the procurement process was conducted perfectly.”

In his 40-page report, he notes that Ferguson’s submission scored second highest on meeting the technical specifications, even though there were concerns it had prior access to a key document.

Smith suggests that this came about because a third party had not signed a non-disclosure agreement for work it had done with CMAL, so was able to pass the document on to Ferguson.

The report also suggests it was correct that Ferguson was allowed to compete in the procurement, even though it had not been able to provide a refund guarantee to protect the public purse in the event of the contract going wrong.

BBC Scotland
The BBC said it stands by its claims (pic: Terry Murden)

Smith argues that Ferguson met the condition of the procurement by providing evidence of its attempts to secure the guarantee through its bankers.

He dismissed the claim that Ferguson received favourable treatment by being allowed to alter its bid.

Three of the shortlisted shipyards had been asked for clarifications around certain elements of their proposals.

According to Mr Smith, CMAL’s senior technical manager told him that Ferguson’s submission was not considered a new bid.

He said: “If ‘revise’ is to be given its ordinary meaning, ‘to reconsider and amend’, I am bound to conclude that the FMEL bid was revised — or an opportunity for such was provided — as well as for the other two shortlisted shipyards.

“I cannot draw any conclusion on the more serious allegation that FMEL were allowed to submit what amounted to a new bid. Whilst this aspect of the procurement process is not entirely satisfactory, I have found no evidence of any fraudulent intent on the part of any CMAL employee.”

Mr Smith confirmed there was a meeting between CMAL and Ferguson staff to go over the submission in June 2015. Other bidders, who were based overseas, did not have the same opportunity.

He said: “Whether or not this differential approach is consistent with the need for fair and equal treatment in the procurement process is not for me to say but I found no evidence suggestive of fraud on the part of CMAL employees.

“I cannot reasonably reach any conclusion as to whether this meeting was material to the outcome of the procurement.”

Glen Rosa
The Glen Rosa is behind schedule

His 14 interviews between March and June included representatives of CMAL and the BBC. He said in his report that he had met the journalist behind the documentary programme in July this year.

He received an email from the journalist stating: “We are concerned that your remit has been drawn so narrowly that it will exclude examination of the important allegations the BBC made.”

The BBC said it declined to take part in the review when it became clear its terms excluded the central allegations made in its programme and pointed out it had never accused CMAL of fraud.

It said: “Those allegations questioned whether the ferries contract was awarded fairly and within procurement rules. We would be happy to share our evidence with any formal, independent inquiry into the allegations that we did publish. The BBC stands by all of the journalism in the programme.”

Kevin Hobbs, chief executive of CMAL said: “We welcome the findings of Barry Smith KC‘s independent investigation, which has established no evidence of fraud in the procurement of vessels 801 and 802.

“We do, however, recognise that the report identifies a number of missteps over the course of the procurement during 2014 and 2015, and mitigations have been in place for several years to ensure these do not happen again.

“For example, all parties involved in a CMAL competitive tender are required to sign a confidentiality agreement, and all clarification meetings with bidders are now carried out using the same method of communication.

“The KC’s report recognises the CMAL team at the time of this procurement as diligent, dedicated, hardworking individuals – which we stand by entirely. This is also true of current team, who are firmly focussed on the delivery of these vessels, working closely with Fergusons to ensure they enter service as soon as possible.”

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