News / Firm fights back over flawed ferry contract
A FREIGHT and haulage company is pursuing a multi-million pound damages claim against the Scottish government over its failed bid to win the northern isles lifeline ferry contract.
Streamline Shipping Group is arguing that ministers were in breach of procurement regulations when they awarded the £243 million contract to multinational services company Serco.
Streamline say the ‘competitive dialogue’ tendering process was “fundamentally flawed” in that it failed to provide proper and comparable specifications for the lucrative contract.
The company initially challenged the decision to appoint Serco by raising a legal action before the Court of Session, resulting in the awarding of the contract being temporarily suspended.
However the suspension was lifted on 29 May last year, five weeks before the six year contract was due to start.
Judge Lord Malcolm decreed that the interest of a private bidder were less important than removing uncertainty over the contract for island communities.
On Tuesday, Streamline’s development director Gareth Crichton said the legal battle was far from over confirming that the company was seeking around £400,000 in compensation and an unspecified multi-million pound sum for the loss of expected profit.
Crichton said: “We remain firmly of the belief that the tender process was fundamentally flawed in that the government’s needs and requirements were not adequately specified, and further, that the ‘competitive dialogue’ process was conducted amid irregularity.
“No one in Orkney or Shetland knew what had been asked for. There was no consultation on what the level of freight service should be; there was just a broad description that we need to meet demand.”
He added that even the previous operator, Scottish government-owned NorthLink Ferries, also failed to meet the required standards even though it was bidding for a service it had run for 10 years.
Crichton said: “We bid two freight ships year round; we now know that NorthLink bid just one and they were eliminated – so the government’s own company didn’t know what they were supposed to be doing – and Serco bid one and a half ships.
“The specification was to ‘meet the demand’, but we also now know that Streamline trailers are being left behind. So our view is that Serco is not carrying all the demand, and we have the evidence.”
He added that the month long disruption on the Pentland route this spring when the passenger vessel Hamnavoe had to be taken out of service demonstrated that there was “inadequate contractual obligation” to provide a replacement ferry.
A date for the case to be heard has not been set yet, but a preliminary hearing took place last Thursday.
The Scottish government said it would continue to robustly defend their actions.
“Specific consultation on fares and services, among other things, was carried out with key local authority officials, and regional transport partnerships, and comments received were fully taken into account while the contract was being specified.
“In addition to this specific consultation, in 2010 the Scottish government carried out a wider public consultation on the northern isles tender exercise.
“Almost 400 responses were received and all views were considered in specifying the services.”
Serco said it would not be appropriate to comment on the legal action raised by one of the unsuccessful bid parties in the northern isles ferries procurement.
When Lord Malcolm lifted the suspension to award the contract in May last year expenses were awarded to Scottish Ministers, as well as Serco, who were also represented in court.
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