Review of ferry tendering

A policy review into future tendering for Scottish Government ferry contracts has been launched by the Minister for Transport and the Islands Humza Yousaf.

It follows correspondence from the European Commission on the Teckal Exemption, prompted by a joint approach from the Scottish Government and the RMT union.  The response indicates that, in certain circumstances, public ferry services could be awarded to an “in house” operator without the need for tendering. 

The review will look in detail at the implications of the Commission’s response on future tendering, in particular the Teckal exemption and State aid rules. Key stakeholders will be engaged during the process.

The current Gourock – Dunoon procurement will be paused whilst the policy review is carried out. This will require an extension of the current contract in the order of 9 months. The review will also consider the potential implications for the Northern Isles services. 

Mr Yousaf said:

“The reply from the European Commission provides welcome advice and information on the application of the Teckal Exemption. This gives us an opportunity to further consider future tendering options for Scottish Government ferry contracts.  As always, our aim is to provide the best possible ferry services to our island and remote mainland communities, and we will take this opportunity to look again at how this is achieved.

“Transport Scotland will undertake this review to address the potential implications of the European Commission’s reply on the procurement of our ferry services.  It will cover the application of the Teckal exemption in light of the Commission’s latest advice, the requirement to ensure compliance with State aid rules, and all other legal, policy and financial implications relevant to alternative models for procuring the ferry services.
“It is important to highlight the Commission has made it clear that any solution must comply with State aid law, as well as meeting the requirements of the Teckal exemption. 

“We cannot pre-judge the outcome of the review.  However, should it conclude that it would be possible to apply the Teckal exemption and meet State aid rules then we would be minded to provide ferry services through an in-house operator, taking account of the communities they serve.  This would, of course, be subject to wider policy and value for money implications and the views of those communities.

“We need to give very careful consideration to the potential impact of any changes before final decisions are made.  Pausing the current tendering exercise for the Gourock-Dunoon service will give us time to consider these complex issues so we’re clear on how best to deliver ferry provision in the future.  The policy review will also consider the implications for the Northern Isles services.  We have already started engagement with the current operators of both services to discuss the implications of the review.

“I’m also well aware that this review will be of key interest to ferry staff, users and local communities, so I have asked Transport Scotland to engage fully with trade unions and other stakeholders in the course of the review. 

“Our ferry services are iconic transport links that play a vital role for our island economies.  Making sure they continue to support the communities they serve, as well as delivering best value for taxpayer’s money, will always remain at the heart of our ferry operations.”

Background info:

1. The Teckal exemption allows for public contracts to be awarded to in-house companies under strict conditions relating to the parent authority’s control and the functions performed.  

2. The current Gourock - Dunoon ferry contract is due for renewal by end of June 2017. 

Published 2 Feb 2017