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Streamline disappointed by ferry contract ruling

Streamline managing director Gareth Crichton.

STREAMLINE has expressed its disappointment after a judge ruled in favour of the Scottish Government over its £12.7 million legal challenge to the award of the north boats contract to Serco back in 2012.

The company pursued the government for compensation for what it believed was a flawed procurement process, but Lord Doherty dismissed its case last week.

Streamline, or Shetland Line (1984) Ltd., alleged that the Public Contracts (Scotland) Regulations 2006 had been breached because of the government’s “failure to specify with sufficient degree of clarity the services required under the contract”.

It also accused the government of a “failure to ensure sufficient objectivity in the evaluation of bids leading to an unrestricted freedom of choice in the selection of tenders contrary to regulations”.

A court of session hearing took place over seven days last December and heard Streamline managing director Gareth Crichton argue that the bid should have included provision for a freight service in addition to the roll on/roll off service provided on the ferry route.

But Lord Doherty sided with Transport Scotland’s head of ferries policy and contracts, Judith Ainsley, who said she had made it clear to bidders that it was down to them to decide how best to provide a freight service on the route.

A consultation has started ahead of tendering for the next north boats contract, which takes effect from April 2018.

Crichton claimed that, had it known there was no need to provide a load on/load off freight service as part of the contract, they would have presented a cheaper bid than the successful £223 million one from Serco.

But the judge said Streamline was presenting “hypothetical” figures “with hindsight and knowledge of the winning bid”.

On Monday, Streamline chairman Stuart Roberts said management and staff had put “a great deal of time and effort” into both the 2012 tender and pursuing the case since.

But he accepted that Doherty’s opinion “draws a line under the matter for us” and it would “take what we have learned from the process and look to future service developments for the Northern Isles”.

Crichton said it was “gratifying to have confirmed in court the very marked difference around service quality between the Shetland Line bid and the winning Serco bid”.

“We now know that our bid outscored that of Serco on almost every aspect of service,” he said, “with more capacity, more frequent departures, enhanced timetables, improved fare structures, better start-up planning, enhanced marketing, a more robust operating approach including on health and safety, quality and environmental management.

“The scoring difference on quality amounted to some 12 percentage points whereas the price difference turns out to have been very slight – less than three per cent on the present value of grant, and when the particular method of accounting for fuel is removed then the difference was closer to just one per cent.

“Further, with scope for savings now within the contract on port and fuel costs where sailings are cancelled, it is arguable as to whether the focus on price as opposed to service provision has in fact led to ‘best value’ in the procurement.”

Crichton added it was “perhaps timely that today sees the commencement of consultations on the requirements for the next Northern Isles ferry services contract to run from April 2018”.

NHS Shetland chairman Ian Kinniburgh asked if the government's starting point for Northern Isles fares could be that all Scottish islanders pay the same.

He was present at Shetland’s external transport forum meeting in Lerwick Town Hall on Monday to hear Paul McCartney from consultancy firm Peter Brett Associates speaking about its work for Transport Scotland.

The company has been tasked with appraising the various options for the next contract.

McCartney said nothing would be ruled out during the exercise, with analysis of timetabling, capacity, fares, harbours and the vessels themselves to take place.

It will hold drop-in sessions and gather questionnaires and surveys in a process forum chairman Michael Stout described as “new and unique, certainly in contrast to the previous contract”.

Stout said the so-called “STAG” process would “get everything onto the table, and therefore an understanding of why certain options perhaps have to come off it”.

SIC councillor Jonathan Wills said the consultants would be “wasting your time if you’re looking at any other port than Aberdeen”.

But he questioned why there needed to be two freight and two passenger ships, called for a cut in the number of calls at Orkney and the introduction of a weekly summer sailings to Bergen in Norway. 

McCartney was also reminded that the “road equivalent tariff” (RET) would not be of benefit to passengers in Shetland because of the distance from the mainland.

NFU Shetland chairman Jim Nicholson said there needed to be a “much more sophisticated model” to bring fares to a level comparable with those enjoyed by Western Isles residents and tourists.

Meanwhile NHS Shetland chairman Ian Kinniburgh suggested that, if the Scottish government wanted to reduce inequalities, it ought to look at a system where all islanders paid the same to reach the mainland as a starting point.

“Why should Shetland have to pay more because it’s a more remote island than anywhere else?” he asked. “I guess that might be a step too far, but as a starting point for a different approach, why not?”

Council development committee chairman Alastair Cooper said the single biggest change for Shetland industry such as seafood exporters would be to have ferries leaving later in the evening to increase production capacity.

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