Chamber and committees

I understand and have seen many of the submissions to ministers in the published documents. Forgive me if I sound as if I am explaining some basic things here, but there is a provision on Cabinet agendas called SCANCE—Scottish Cabinet analysis of news and current events—which I think was there for previous Administrations as well and through which ministers can report things to Cabinet without full papers that require decisions. Issues around those will usually be reported to Cabinet after the event, as decisions taken.

Procurement decisions are not made by Cabinet. We decide the policy and budget, but the Cabinet would not decide on the actual award of a contract—the Queensferry crossing is an example of that. There will not have been full papers and Cabinet decisions on all of the matters that you raise. The decisions will have been taken—

Again, there are different aspects to the issue. In relation to the original decision on how many milestones there should be and what percentage of the contract price should be attached to each of them, that was a negotiation between CMAL and FMEL. I think that Kevin Hobbs made the point to you when he was here that that is standard. There is nothing untoward or unusual about that. In fact, he made the point that there is often flexibility around that.

It has been commented that there would usually be five milestones. There were more in this contract, but as Kevin Hobbs said, projects that he has been involved in have had a range of different numbers of milestones. There was nothing untoward in that and, as I understand it, it is standard in how such contracts are structured.

That then puts an obligation on the contractor—in this case, it was CMAL—to make payments when particular milestones are reached. That would be what the legal advice was about. When it got to the point where steel was being cut, that triggered a milestone payment, which CMAL had no option but to pay. As I understand it, that is not peculiar to the contract. It is a standard part of shipbuilding contracts of the type that was used.

I think that there is an issue—although, again, as I understand it, it is not unique to the contract—in relation to the substance that needs to be evidenced about the progress on the contract before payments are made. That is one of the lessons on which we need to reflect. Should it be enough that the steel has been cut? Should it not be that that has led to progress on construction of the vessel? We need to reflect on that aspect—although, if changes to that took the approach that CMAL would use out of what is standard in shipbuilding generally, it would have implications for contracts, so that would have to be considered as well. However, that part of the matter is one of the lessons that we, and CMAL as part of that, need to reflect on.

The significant issue that ministers were involved in considering, not least because we had to give CMAL the budgetary approval to do it, was about changing the final milestone payment from 25 per cent to 10 per cent to allow, in effect, the acceleration of some of the contract price. From previous evidence and other published documentation, you will be familiar with the fact that CMAL attached particular conditions to that but Government gave the approval because we had to make funding available on a different schedule and in a different financial year from what was originally anticipated.

That is a really important point. Believe me, I have agonised over it. Perhaps I might need to put it more clearly, but I think that I did answer you on that point.

If, at the time—on 8 October 2015—we had known probably a fraction of what we know now, clearly, we would wish that we had taken a different decision. However, we did not know that at the time, so all that I can do is assess the information that we did have then and come to a view on whether the minister took a reasonable decision based on what was before them. Every decision involves a balancing of risk. The risk was clearly set out but so, too, were the mitigations. Also, taking another approach would not necessarily have avoided all the problems. Based on what was known at the time, I think that it was a reasonable decision. However, based on what we know now, of course I wish that I could turn the clock back and take a different decision.

I would have taken a decision—I do not know what it would have been, but it would have been one that did not lead to delays on the vessels. However, your asking me that question demonstrates the inherent weakness in trying to take decisions with the benefit of hindsight. We can only take decisions on the basis of what is before us at the time, and that is what I have looked at very closely. I am trying to be as frank with you as I possibly can be. Every day, we take decisions on all sorts of matters based on what we know at the time. There will be times when things happen in a way that makes us wish that we could take a different decision, but that is not how life works.

Thank you very much, convener. I will be brief in my opening statement because I am keen, as I am sure you are, to leave most of the time for questions. I thank the committee for the opportunity to be here and speak with you this morning.

Obviously, many of the matters that we will discuss have been covered in previous evidence sessions that the committee has undertaken. Information about some of them is already in the public domain. For example, there is the information that the Scottish Government has proactively published. I am happy to go over any of that, to confirm the evidence that you already have or to provide whatever further clarity on those matters the committee seeks.

It is important to say at the outset that I am acutely aware that the delay in relation to vessels 801 and 802 is having a very significant impact on island communities. That is a matter of considerable regret, and I absolutely recognise that the decisions on the procurement of those vessels, the progress—or lack of progress—since and the Scottish Government’s broader support for Ferguson’s shipyard are areas of significant interest and concern. The issues are obviously complex—I do not need to tell the committee that—and span a period of several years.

I record my thanks to Audit Scotland for the work that it did in preparing the report that has led to the committee’s inquiry. That has been an important part of the scrutiny process. To be clear, the Scottish Government accepts all the recommendations in the Audit Scotland report and, of course, we also accept unreservedly that the outcome in relation to the vessels is not what anyone, including the Scottish Government, would have expected at the point of contract award.

It is inevitable and understandable that decisions that were taken at different points—when the contract was awarded and thereafter—are now seen through the prism of what has developed since. I understand that. However, in seeking to make judgments or to set out the basis of decisions that were taken, it is important to consider what was before ministers at particular points. I will seek to provide as much insight into that as I can.

I am happy to address concerns around the announcement of Ferguson Marine Engineering Ltd as the preferred bidder, the subsequent award of the contracts, the builders refund guarantee, milestone payments and the dispute resolution process. I am also happy to address issues relating to the loan payments that were made by the Scottish Government and the progress of the vessels since the yard came into public ownership.

Obviously, the project is still live—regrettably so—and the Scottish Government remains absolutely committed to delivering both ferries and supporting our island communities that rely heavily on such vessels daily.

I will stop there, convener. As I say, I am happy to get into any of those issues or, indeed, any other issues that the committee wants to explore with me.

Yes. Sorry—are you talking about the letter?

I understand that there is a typo in that letter relating to a particular date, on which the committee will be getting written clarification, but—subject to that—yes, I think that it meets those standards.

First, I believe, and am of the view, that Keith Brown answered the questions that were put to him by the committee. Secondly—perhaps more substantively, for today’s purposes—I am the First Minister: I am here to answer any questions, and the committee has me for as long as it wants this morning. I am not sure that anybody is going to do a word count on either the questions or the answers, but I am here to answer, to the best of my ability, any questions that the committee has.

I do not know whether the committee has invited Mr Brown to give evidence in the way that I am doing today. The committee is perfectly free to do so, but I am here today, as the head of the Scottish Government, to answer any questions that you put to me.

As I said, I noticed that last night, and you have noticed it. I have asked Transport Scotland the question, “How did that happen?” and I believe that it was an error. The fact of the matter is that we all have the full letter. I think that, in many respects, the tone, tenor and content of that letter has—to be perfectly frank—been misrepresented, so I am very happy indeed to go into as much detail as you want about every single paragraph of it.

I will not quote directly from the Audit Scotland report. I have it here, but I do not have it open in front of me. However, I have certainly read comments made by Audit Scotland—if not in the report then around the report when appearing before your committee—that it felt that it had full co-operation from the Scottish Government and had not been obstructed or had any relevant information withheld. Obviously, I am paraphrasing and not quoting directly.

There is the particular issue of the response of the minister at the time, Derek Mackay, to the submission of 8 October 2015, which led to the final award of the contract. Audit Scotland understandably raised concerns about the fact that it had not seen it. In fact, for a period, we thought that it did not exist, but it was then uncovered, and it has now been published. If it is not on the committee’s website, it is certainly on the Scottish Government’s website. If that is what the convener is referring to, much has been said about that, and understandably so.

As the committee would expect, I have reviewed all the information that the Scottish Government has published. Indeed, I have now done so on more than one occasion. The Scottish Government has provided a wealth of material and documents in relation to its decision making and the wider issues around that.

If anybody, particularly members of the committee, believes that there is information that has not been published and should be published, and if that is put to me today or subsequent to this meeting, I will certainly give best endeavours to ensuring that anything further that we can helpfully provide is provided. I absolutely give that assurance. I am here today to answer any and all questions that are put to me. If there are any that I cannot answer today, I assure the committee that I will come back to you on them.

There is an absolute determination and commitment on the part of me and my Government to be open and transparent to ensure that the issues are fully open to scrutiny and that we demonstrate the lessons that are being learned from all the experiences over the past few years.