Chamber and committees

I again caveat this by saying that I am not a technical expert on how to design and build ferries. It feels as if all of you have become technical experts on that, but none of us is.

What was used here was a standard shipbuilding contract. Setting aside the issue of the builders refund guarantee, this was a standard approach that CMAL used in other procurements. Organisations and Governments procuring vessels across the world will use the BIMCO standard contract. A key point is that that standard contract puts the obligation for design and construction firmly on the shipbuilder. The contract contains provisions relating to modifications and changes to the contract specification.

The standard in shipbuilding contracts is that the tender design requirement set out by the client is then developed by the bidder into a concept design as part of its tender. Following contract award, it is then developed into a basic and finally a detailed design. All of that was accepted by FMEL when it tendered for and then entered into the contracts. As I now understand it, that is an absolutely standard approach to building ferries.

It is the responsibility of the shipbuilder to satisfy itself that the design is at an appropriate stage for work to commence. You have heard directly from CMAL on that point: it was the decision of FMEL—not a decision of CMAL—not to wait for a finalised design before it started construction. In fact, I think that CMAL used the term that it had opted instead to “build at risk”.

The putting in of the tender, and the agreeing of the contract on the basis of the tender and all those standard provisions, was something that FMEL did, knowing that it was taking on that responsibility. FMEL did not raise the issues that have since been raised retrospectively. To my knowledge, it certainly did not raise those issues at the time of the contract process.

Are there lessons to be learned? Of course, but I have not seen anything that would suggest that what was done in terms of the procurement and design arrangements was different to what would have been done in contracts that do not run into such problems. FMEL contracted to do a job. That job has not yet been done. I cannot speak to the advice that FMEL took, but it presumably took its own technical, legal and other advice before signing that contract, with all the obligations that came with it.

Committees—and particularly this committee, the Public Audit Committee—know full well the issues that any Government, not just this one, has with the release of legally privileged or commercially confidential information. That process has been applied to the information that has been released. If you feel that there is any piece of information or document that exists and which you do not have, and you want to put that to me, I will endeavour to consider whether it is able to be made available. However, those processes apply, and any Government applies them, which I think is well known.

With the greatest of respect, that is a pejorative term. We have a contract that has not been delivered the way that it should have been.

That is a very different thing to the term that you used.

Just as I have a duty to be open and transparent, I think that the committee probably has a duty not to indulge in shorthand such as that, which has not been evidenced.

At the time that the yard went into administration, I was not First Minister. My predecessor was—rightly, I should say—doing everything that he could to see whether we could find a buyer for the yard. I understand, and would have understood at the time—I cannot give you precise dates for that—that Jim McColl was somebody he was speaking to about that.

I was not directly involved in that at the time, but I am not telling you that I did not have an awareness of it.

I had a professional relationship with him. Jim McColl had been on the Council of Economic Advisers, and I think that he had done other pieces of work for and around the Government. I cannot remember the exact timing of this, but he made a contribution to the skills policy of the Scottish Government. I would have come across him in what I would describe as a more political context, but I would not say that I had, or have had at any time, what I would describe as a personal relationship with him. It is a professional relationship.

Jim McColl is a businessman of renown and standing in Scotland—he is a public figure, in that sense. As regards his relationship to my party, to the best of my knowledge, he is not a member of my party and has never been a financial contributor to my party. I am not even sure that it would be correct to describe him as a full-throated supporter of independence. He has certainly made comments about constitutional politics.

When I became First Minister, my relationship with Jim McColl was principally through his continued membership of the Council of Economic Advisers.

That was the point at which—if my memory serves me correctly—we commissioned the independent QC to look at the matter. At that point, we were all trying to see whether there was a way through.

CMAL’s concern at that point, in addition to its concern about the lack of progress on the vessels, was that the surety bond was due to expire, so things were obviously coming to a head for CMAL in that sense. The discussions from that led to the commissioning of the independent QC, and the view there was that there was no legal basis in the contract for CMAL to make those payments. The process, which ultimately concluded with nationalisation, continued after that.

I am trying to be honest—I do not, as I sit here right now, know the answer to that question.

By definition, preferred bidder status—versus final contract award—means that the final contract award decision has not been taken and negotiations are still on-going. I would have known that in general terms, but I have reviewed the briefing that I got for that event and it rightly says—which I would have assumed anyway—that there were still significant negotiations to be concluded before the final contract award. Although it is not flagged up in that briefing as a particular issue of concern, there is a very clear reference to the on-going negotiations, including issues and complexities around the level of guarantee that FMEL would provide. So, yes, before I made the announcement of the preferred bidder on 31 August, of course I knew that it was not a concluded negotiation, because it was still at the preferred bidder stage of the process.