THE NORTHERN Isles ferry contract is set to go out to tender again after the Scottish Government decided against taking it in-house.
Shetland MSP Tavish Scott responded by saying ministers had made the "right decision" on the matter, while Shetland Islands Council has also welcomed the news.
The current contract, held by Serco NorthLink, was recently extended to October 2019 to allow further discussions on the matter.
The government, however, now hopes to award the next contract in summer next year and it will start procurement in June.
Ministers explored whether it could take the contract in-house, but there was local opposition to the move.
The SIC supported the contract being tendered again - a stance strongly echoed by local industries such as the seafood sector.
Transport and islands minister Humza Yousaf said: "We have always said we would take the views of the local community into account when it came to the procurement of the next Northern Isles ferry services contract.
"Through the consultation process, it’s become clear that the preference of the local communities is for this contract to be put out to tender, rather than a direct award to an in-house operator.
"In addition, the latest correspondence from the European Commission means satisfying European law for a direct award will take us beyond the currently extended Northern Isles contract.
"As a result, we will start the tender process next month in order to allow enough time to complete this high value and complex procurement, ensuring that communities and businesses have the certainty they need. Delaying this any further would put the continued delivery of ferry services at risk, something I am not prepared to do.
"The decision to tender the Northern Isles contract does not change my position on the future approach to be taken for the next Clyde and Hebrides contract. I remain minded to make direct award to CalMac if we can satisfy all the necessary criteria."
Speaking at the Scottish Parliament on Thursday as the news was announced, Scott responded:
"The uncertainty over our lifeline ferry services has now ended. The Scottish Government have taken the right decision.
"Serco NorthLink have proved both adaptable and flexible in meeting the needs of passengers and Shetland's economy. They have particularly recognised the need to ensure Shetland's £300 million seafood industry can always export to Aberdeen with minimum disruption.
"I want to ensure the new specification for the service meets island needs. The minister has promised to discuss these vital details with industry, the council and other interested parties.
"There are concerns over capacity. When RET is finally introduced there will be greater pressure on space aboard the ships, both on the vehicle deck and for cabins. The new service must above all meet island needs. That is what it is there to do."
Conservaties' regional list MSP Jamie Halcro Johnston said "it is clear that the minister’s hand has been forced by the European Commission, who have told him that getting rid of tendering would be ‘significantly challenging'".
Scottish Greens' Highlands and Islands MSP John Finnie, who recently called for the ferries to be "run in the interest of public service, rather than solely for private profit", said the move was a lost opportunity for the government.
Chairman of SIC's transport committee and regional partnership ZetTrans Ryan Thomson said: "I’m very pleased to hear that the transport minister has decided to put the Northern Isles ferry services out to tender.
"We were pleased the minister took the time to visit and engage with the community and stakeholders, and has taken on board our views. This announcement will be well received locally and has the potential to deliver a good outcome for Shetland.
"I look forward to working with the government on the contract specification. We must work together to ensure that the capacity and costs to users for passenger and freight services will be fit for purpose for both industry and the local community."
The Hrossey, Hjaltland and Hamnavoe were previously leased from the Royal Bank of Scotland.