March Newsletter – From the Helm

Improved bid process will deliver more confidence in contract awards

Kevin Hobbs, CEO

Our recent contract award for the two new vessels for Islay has given us the first opportunity to refine our vessel procurement and contract management processes: this is in light of experience.

Driven by the problems we have experienced with the dual fuel ferry project, and informed by the recommendations from the Scottish Parliament inquiry into vessel procurement, we have made improvements to make the bid assessment process stronger than ever.

We have redesigned our tender process to carry out additional risk assessments on all bidders and enhanced financial checks on the preferred bidder, including input from an independent accountant.  We’ve commissioned an independent naval architect to assist in concept designs and technical assessments as part of the procurement process.  We will also implement a new series of independent gateway reviews during procurement and throughout all new shipbuilding projects.

As part of our evaluation of the shortlisted shipyards for the Islay vessel, we conducted onsite visits and assessments at each of the shortlisted yards; Damen Shipyard in Romania, Remontowa Shipbuilding in Poland, and Turkish shipyards Sefine Denizcilik Tersanecilik Turizm, and Cemre Marin Endustri, which is the contract winner. Quite a challenge as many of the travel restrictions and testing regimes were still in full force

These visits have always been a critical part of our vessel tender process because they allow us to correlate the bid response from each yard with the reality. While on-site, we gain a better understanding of the location, facilities, berths, workforce, reporting systems and IT, quality assurance protocols and the level of automation at each yard. If contract partners allow, we also get a chance to view the vessels each yard currently has under construction, which provides insight into activity levels, staffing numbers, work progress rate and quality of building.

Relationship building is a benefit of this stage of the process. The contract to build the vessels will last at least two and a half years, and good interpersonal relationships are conducive to collaboration. I attended each visit with our director of vessels, a technical superintendent, as well as a shipbroker and independent assessor. We met with senior management teams and project managers, and the shipyard’s nominated design consultant, all of which provides us with a solid understanding of how the contract would be managed, if awarded. Assessment visits to each of the shipyards contributes to the overall score of their bid, alongside technical and financial criteria.

Our bid process improvements, which will be applied to all future shipbuilding projects, combined with our tried and tested measures mean we start the Islay vessel design and build contract on a confident footing, with robust due diligence and quality checks recorded.

We look forward to working with the team at the winning shipyard, Cemre to deliver two new vessels for communities in Islay and Jura.  The project is part of significant investment plans we have for Scotland’s ferries and harbours, supported by £580m from the Scottish Government over the next five years.