 I welcome everybody to this, the 17th meeting of the Public Audit Committee in 2022. Willie Coffey, one of the members of the committee, isn't able to join us in the committee room, but I'm pleased to see and to see that he is joining us via video link, and Willie knows that he just needs to indicate in the chat function if he wants to come in at any point. The first item on the agenda for the committee is just to agree or not to take agenda items 3 and 4 in private. Are we all agreed? We are agreed. The principal item on our agenda this morning is continued consideration of the Auditor General for Scotland report, new vessels for the Clyde and Hebrides arrangements to deliver vessels 801 and 802. It's a continuation of the session that we had on 26 May. I welcome back our witnesses this morning, Colin Cook, who's the director of economic development in the Scottish Government. Dermot Rattigan, who's the deputy of manufacturing and industries. More Rooney joins us in the committee room today. More is the deputy director of strategic commercial interventions in the Scottish Government. We've got Hugh Gillis, who's the interim chief executive of Transport Scotland. Fran Pachiti, who's the director of aviation, maritime freight and canals. Chris Wilcox, who's the head of the ferries unit in Transport Scotland. Before moving to questioning, I would like to place on the record the committee's disappointment that we are not joined today by the Portfolio Accountable Officer for Transport, the director general net zero. Section 9 of the Scottish Public Finance Manual is pretty clear about the expectations that are placed on designated accountable officers to give evidence before the committee, and we retain the option of calling back the DG interim for net zero at some point in the future. Can I remind members and witnesses that we are, as always, up against the clock and to try and keep questions and answers as short and concise as possible, and I would now like to invite Colin Cook to make an opening statement. Mr Cook. Thank you, convener, and good morning, convener members. Thank you for this invitation to follow on from our previous evidence session from 26 May, which covered vessels 801 and 802 and the Scottish Government's support for Ferguson Marine. I appreciate that the Audit Scotland report covered a lot of ground, and in our last session we focused largely on the initial procurement of the vessels and the period prior to the Scottish Government taking control of the shipyard. Of course, we are happy to answer any further questions on that topic and, of course, address other areas that may be of interest to you. I should note, as we indeed did last time, that people involved in the original decisions have moved on in their careers since the project began back in 2014, some to other roles in government and some have left the Scottish Government altogether. However, the panel that the convener introduced will aim to cover all the relevant areas. I am Colin Cook, director of economic development, and I am joined by two colleagues from Economy, Mo Rooney and Matt Rattigan, and we will be able to speak to issues around the Scottish Government's support to Ferguson Marine as a business, on-going progress with the vessels and the loan funding provided to Ferguson Marine Engineering Ltd prior to public ownership. From Transport Scotland, as has been introduced, Hugh Gillies, Fran Prasiti and Chris Wilcock will be able to cover other issues relating to the delivery of vehicles to the vessels prior to public ownership and the contractual matters that we focused on in the last session. With your permission, convener, I will try and direct the questions to the panel member who can give you the best possible response and information. Finally, again as we did last in the last session, can I just underline that we welcome the Audit Scotland report and we have accepted all of its recommendations? We recognise that there is still work to be done to deliver the benefits that these new vessels will bring, but we are determined to do so and we see this process as a vital part of our efforts. We welcome the scrutiny and the opportunity to reflect on the lessons and we will be happy to answer any questions that we can. Thank you, Mr Cook. Again, I am conscious of the fact that Mr Gillies is an accountable officer and it may be that we will go directly to Mr Gillies in some of the areas that we have I am going to invite, first of all, the deputy convener, Sharon Dowie, to put some questions to you. Page 45 of the report, paragraphs 104 to 109, outlines how the Scottish Government has fundamentally changed the arrangements to complete the vessels since the shipyard was brought into public ownership in December 2019. That includes appointing CMAIL as its technical consultant. During the Public Audit Committee's evidence session with the Auditor General for Scotland in the 28 April 2022, he commented in the new arrangements, stating that there is no denying that the arrangements are unusual. That paragraph also notes that Transport Scotland no longer has a role in the delivery of the ships. That is quite distinct from where we were. So under the new arrangements to complete the vessels, CMAIL has been appointed as the Scottish Government's technical consultant and Transport Scotland no longer has a role in the delivery of the ships. So could you tell me why the decisions were taken and what work was undertaken to assess the risks associated with the changing roles? I will ask Mo to comment on that. As you said, the new financial arrangements came into being on 1 April. That does see the Scottish Government taking ownership of the vessels and entering into a new contract with Ferguson Marine to complete delivery. For the avoidance of doubt, the original FMEL contracts have therefore been terminated and the expectation is that CMAIL will purchase the vehicles via voted loan structures. This did indeed change the financial arrangements from one in which Scottish Government directly funded the operating costs of the shipyard so that work could be undertaken on 801 and 802, which were in turn owned by CMAIL of course. We think that this was inefficient financially because payments were from the resource budget of the Scottish Government rather than the capital budget and did not reflect the true role of the Scottish Government as the primary funder of the vessels. On introducing those new arrangements, I think it is worth saying that internally we did a lot of consideration about what the best structure would be and that decision was fully supported by the Accountable Officer, the DG Economy, the chief executive of Transport Scotland at the time and indeed the Scottish Government's chief financial officer. Mo, is there anything you would like to add to that? Yes, thanks. You covered a lot of the ground. I think that it is an unusual situation. I think that that is fair to recognise. It is unusual for the Scottish Government to be in ownership of a commercial shipyard. The arrangements that we put in place were to, as Colin said, reflect the actual delivery arrangements that were then in place. Transport Scotland was the funder of the vessels under the previous arrangements, so they were not contractually involved in that. They are still not contractually involved, but we keep them in very close touch in terms of obviously progressing the vessels and they have that keen interest in the entry into service, so there is a close partnership there. In terms of assessing those arrangements, this was a very thoughtful and rigorous process in terms of considering all the options to ensure that we were able to fund the delivery of the vessels in an appropriate way. Part of that did include consideration of that role of CMAL. CMAL are an integral part of the process for us. They provide us with professional shipbuilding advice that is really invaluable to us in terms of our understanding of progress on the vessels and allows us to challenge the business in an appropriate way. Their role was considered extent to which I do not believe that there should be any concerns around that. Our interests are very aligned with CMAL and Ferguson's in terms of the delivery of the vessels. It is about getting the vessels delivered as quickly as possible and as efficiently as possible, and certainly we find their support in that very valuable indeed. You do not think that there is any conflict of interest in CMAL's revised role? No, that was considered as part of our consideration of the best approach to structuring the arrangements going forward. No material risk of conflict was identified. As I say, we have a shared interest as opposed to a conflict of interest there. Ferguson's and CMAL, as ourselves, have that shared obligation of efficiency in the economy and delivering those vessels in as soon as possible and at as low a cost as possible. I think that what we are seeing in the joint working between Ferguson's and CMAL at the moment is actually some really heartening pragmatic discussions about pragmatic solutions so that we have not seen any cause there for concern and certainly in our initial analysis there was no cause for concern. Page 45 paragraph 105 states that in March 2021 the Scottish Government finalised arrangements to fund and manage the vessels. That included replacing the existing fixed price contract between CMAL and Ferguson Marine Port Glasgow FMPG with a new contract for each vessel between itself and FMPG. The Scottish Government is committed to paying the additional vessel cost regardless of the final price. You just said there about looking for something that is as low a cost as possible, so is it normal for the Scottish Government to hand a contractor a blank check? That certainly isn't a blank check if that's the situation. Ministers have been really clear with the board, with the management team and with the workforce that these vessels need to be delivered within the budget that they've been allocated. As I say, each organisation, each part of Government that's involved in this, the Ferguson, CMAL and Scottish Government, all share that obligation to deliver as efficiently as possible with an out-of-value for money, so there is no blank check. You mentioned that you accepted all the recommendations in the audit report. Can I just double-check that as the case? Is there any recommendations in the report that you've got any reservations about? No, we're working to implement all of those recommendations and we're actually getting great support from Audit Scotland to do so. The final question was, at what stage in the procurement process the Scottish Government, Transport Scotland and the Scottish Ministers first became aware that FMEL was unable to offer a full BRG? If I may, I'll ask Fran to take that question. I think that this was discussed at our last evidence session and when we spoke about the requirement for a BRG being included within the invitation to tender, when Ferguson responded with their bid, they did not raise any issue with the standard BIMCO terms of which the BRG formed part and that was taken as tacit acceptance. Ferguson's were identified as the preferred bidder in August 2015. Following them having been identified as preferred bidder, there was a discussion between Ferguson's and CMAL in which Ferguson's indicated some concern about the provision of the BRG. There was then a period of negotiation to put alternative arrangements in place before the contracts were signed in October 2015. So, at what point did ministers become aware that the BRG wasn't in place? Ministers became aware that there would have been a negotiation, and forgive me, I'm struggling to recall the precise date, but ministers would have been aware that there was discussion between CMAL and Ferguson's following the announcement of the preferred bidder. Could you come back with the actual date? Yes, I'm happy to do that. Just when everybody actually done it, because obviously last week I was sitting and saying it was maybe rushed into, but obviously there was the consideration of whether they were trying to rush into it because there was an announcement being made at the yard at the end of August, and obviously CMAL were still in negotiations at that point, so it was just to try and clarify at what point, but I'm happy to do that. The announcement at the end of August was in relation to the identification of the preferred bidder rather than the contracts having been entered into. Just to follow up on one of Sharon Dowey's questions, which I think Morrwney you answered, and it was the question about the change in role of CMAL and them becoming having a role in the yard itself overseeing the work, and legitimately I think the question was posed to that representative conflict of interest, and you said that that was something that you'd given consideration to and presumably concluded that there wasn't a conflict of interest. Could you provide us with any documentary evidence around those considerations? I'll certainly take that way and see what we can do. Thank you. While we're on the subject of documentary evidence, at the session that we had on 26 May, there was some discussion about what I think Mr Brannon kept referring to as the bit of paper, and in his evidence he said, with further investigation by Fran Pechiti and the record team, it, the paperwork, turned up. I accept that on that occasion that one bit of paper was not easy to find, but we did find it. Now that we have the bit of paper that explains that the ministers accepted that, that is the totality of the exchange. Can I ask Fran Pechiti what were you asked to look for and who asked you to look for it? I'll take that in stages, if I may. In 2019, we took a decision to proactively publish information that was relevant to all matters in relation to vessels 801 and 802, both the original procurement of the vessels and then the run-up to nationalisation of the yard. As part of that, I asked my team to undertake searches through our record management system to identify all relevant correspondence and that was done. We did that in a thorough way. There was due diligence undertaken and we had multiple people involved in it. We asked our IT colleagues to support us on that to make sure that we had a comprehensive review. At that point, we did not find the response to the submission dated 8 October. Again, when we appeared in advance of the REC Committee in 2020, we did a similar exercise, there was not so much focus put on the absence of the ministerial response to the submission of the 8 October at that point. Again, we undertook that same review and it was not found. In advance of discussion with Audit Scotland in the preparation of their most recent report, we did the same exercise. I was not asked or instructed by anyone to continue to look for the document but accepting the interest that there is in it and understanding our obligations to be as transparent as we can. We did a further search in advance of preparation for this committee. At this time, engaging with IT colleagues, there is some new software that allows forensic searches. That is not something that is typically done because of the resource intensity of it and that identified the submission of the 9 October, which you have. Can you tell us when you found that thing that Mr Brannon referred to as the bit of paper? I cannot remember the date but it was on the morning that it was published on the Scottish Government website. That was the same day that the Conservative Party called the debate on ferries in the Parliament. Is that correct? That is the 11th of May. You found that document on the morning of the 11th of May and the minister was able to waive it in Parliament on the afternoon of the 11th of May, that bit of paper. There was nothing choreographed around that, so as soon as we found it, we alerted ministers to it and put it in the public domain as the earliest opportunity. I am sure that people will draw their own conclusions from that. I will turn to the bit of paper. I asked you what you were asked to look for, because there is some clear dispute about what the bit of paper constitutes. The Audit Scotland report was clear in its key message paragraph 2 that there is insufficient documentary evidence to explain why Scottish ministers accepted the risks and were content to approve the contract award in October 2015. In paragraph 28 of the report, it says that we consider that there should have been a proper record of this important decision. Do you think that that is what you found? I think that there are a couple of aspects to that. The first is the adequacy of the record keeping. It is plain that, in this instance, the record keeping was not what it ought to have been and we ought to have been able to find this with greater ease than we did. That is a significant exception to the record keeping in relation to the rest of the project. We have hundreds of documents that have been proactively published that give a reasonable account of the decision-making here. The submission dated 8 October to which the email of 9 October responds sets out a full account of John Nicol, my predecessor's assessment of the risks associated with progressing with the contract. In the ninth of October, the minister's acceptance of that advice indicated that he was consent to proceed. As Mr Brannan outlined in the last evidence session, that is not unusual. To have something from the minister that just succinctly accepts our recommendation, where that recommendation is found to have been fairer, is not unusual. That is the complete record that I would have expected to see. That is not the view of Audit Scotland. Even after the 11th of May discovery and publication that you were able to make, Audit Scotland said in a comment that the email confirms that ministers approved the award of the FML contract, but there remains insufficient documentary evidence to explain why the decision was made to proceed with the contract, given the significant risks and concerns raised by SEMALE. Notwithstanding what you have said, their view is quite different, is it not? That is the review to which they are entitled. To my mind, the submission of the 8th of October provides a comprehensive assessment of the issues that were under consideration, and the response from the 9th of October is clear that those had been taken into account and the minister's position in relation to them. Mr Gillis, feel free to come out at any point in this exchange. I have to say that you take a different view from Audit Scotland, but then there is another point of consideration, which is the Scottish Public Finance Manual. Section 5.1.9 says that it is the duty of an accountable officer to ensure that risks, whether to achievement of business objectives, regularity, propriety or value for money, are identified, that their significance is assessed and that systems appropriate to the risks are in place in all relevant areas to manage them. Do you think that that document exists? I think that the documentary evidence, as Fran has described and as Roy described in the previous, I concur with. I think that the way that we have been able to present it to the Auditor General and the way that we could now for the Islay vessels and my lessons learned and we have said from the get-go that we will learn lessons lesson and accept what Audit Scotland have said, be able to present that to the auditors at the outset of their review of this, would have been better. I absolutely accept that and we will attempt and have attempted and will continue to attempt to improve on that. As I say in terms of the Islay vessels, I would hope that if the auditor wished to look at that, we could lay out that type of evidence in a much more chronological and straightforward manner than we have been able to do so in this case. In evidence previously, Roy Brannan was quite clear that he felt as though that gap had been filled and the position of Audit Scotland is in their view that it is not. I do not think that that is just a matter of record keeping or a bit of paper, it is about a whole approach and it is about transparency. Can I also pick up on an issue, because what those documents that you found on the level of May, Fran Petiti, tell us is a little bit about who was involved in the decision making process? Mr Brannan told us on 26 May that it was an entirely decision for the transport minister. We can see from the correspondence that you unearthed, which relates to the 8th and 9th of October, copied in on those emails, were the Cabinet Secretary for Infrastructure, Investment and Cities, Keith Brown. The last word in that series of emails belongs to the Deputy First Minister, who was clearly an active player in the decision and the report of his comments was in an email sent at quarter past five on 9 October. How do you reconcile that with the statement that this was entirely a decision for the Minister of Transport? Hugh Gillis, perhaps you could answer that. As I said, having read Roy's transcript from last night, he has laid out his view on that and I would concur that it was with the Minister of Transport for Islands to make that decision and he did make that decision. On the email of 9 October at quarter past five, it does say that it is the Minister that has cleared the proposal. Okay, but what's your comment on the fact that other people in ministerial positions were copied into those emails and were part of that email conversation? As Mr Brannan used in his evidence to the committee back in— What are you going to do next? Well, I concur with his view that it was down to the—in terms of the decision that was being presented to Mr Mackay, it was within his gift as Minister to make that decision for the magnitude of the project that we were taking forward. I mean, Frampi Titi, could you tell me who Alexander Anderson is or was in October 2015? So I don't know Mr Alexander and I understand from colleagues that he was a special advisor in post at the time. A special advisor to who? Mr Rattigan, do you know the answer to that? I don't recall at the time because sometimes special advisors support multiple ministers. So nobody knows who Alexander Anderson was who's on those email trails that you unearthed on the 11th of May. Well, my understanding is that Alexander Anderson was a senior special advisor to the First Minister of Scotland and was copied in on those emails. So again, I asked the question, if you are saying it was entirely a decision for the transport minister, why was the Cabinet Secretary for Infrastructure, Investment and Cities copied in? Why was the Deputy First Minister of the Cabinet Secretary for Finance copied in? And why was a senior special advisor to the First Minister of Scotland copied in? So I'm happy to answer that again, but I have nothing to add beyond the evidence that's already been given by Mr Brannan and by Mr Gillis. So it is good practice when addressing ministerial submissions, you address the submission to the minister who is accountable for taking it, responsible for taking the decision. It is good practice to copy that into other ministers or other members of cabinet who might have an interest, either in terms of their portfolio interest or their constituency interests, but by copying them into that email for awareness or that submission for awareness does not then mean that they are taking the decision on it. Similarly in relation to special advisors, all special advisors are appointed as special advisors to the First Minister. Within that, the working practice is that they will have a particular affiliation to a minister or a cabinet secretary at the time. I don't know, forgive me for that, I don't know who Mr Alexander would have worked with in particular at this point in time, but they are all, to my knowledge, designated as special advisors to the First Minister and nothing should be inferred from that. Mr Cook, in the standard template that we use within Government to have these kind of exchanges, it makes it absolutely clear the basis upon which other ministers are copied in on to any submission. There is a section on our minutes that says that it is being copied in for portfolio or constituency interests and one ticks those boxes to make that clear. Okay, thank you. Can I turn to the 31st of August, which was the day that the First Minister went to the Ferguson Marine Shipyard to announce that Ferguson's were the preferred bidder? We subsequently discovered that the negotiations had not been concluded at that point, and the bone of contention about the builders refund guarantee was still under active negotiation, and we later saw Seamall's view about what that meant and the risks that they thought that involved. Do you think that having a high-profile announcement at the shipyard would have prejudiced the negotiating position, Mr Gillis? I don't, because at the end of the day the negotiations between Seamall and Ethmel and there in the room together. When I go back and look at the Rural Economy and Connectivity Committee report, one of the summary of conclusions and recommendations that they make, and I think that it is the very first one, is that Transport Scotland and Seamall applied inadequate due diligence in scrutinising and signing off the procurement process. Did you accept that recommendation? No. For clarity, Transport Scotland was not a party to the procurement. We did not assess the bids that came in. Seamall was the procuring authority, so the assessment of the bids would be for Seamall rather than Transport Scotland. As part of our assurance processes, we did ask the Scottish Government—an independent team within the Scottish Government—to undertake a review of the procurement process, and they found that that was in response to complaints from Mr McCall that the process had been unfair, and they found that there was no material issue with that procurement process. This seems rather odd with the conclusions that were drawn by Audit Scotland, that Transport Scotland did have some oversight responsibility for the procurement process. We heard the manager from Mr Brannon last time that it was all about buyer and builder, but that is public money. Do you not, as an accountable officer, have some accountability for how that money is spent? However, Seamall was one of the sponsor body, and it was through the sponsor body relationship with Seamall that we would have kept oversight of that. I just want to put to you a final point, which is again relating to whether or not the First Minister was involved either through a special adviser or directly or indirectly, and Mr Brannon was quite clear. It is a pity that he is not here today, but anyway, he was quite clear in his evidence last time round that there was no involvement whatsoever of the First Minister. We accept him at his word. If that is the case, could you give us your understanding then of why, when the First Minister was questioned on 29 March by Glen Campbell of the BBC, and he asked her, was it on your say-so, did you say go ahead? Her reply was, I didn't say don't go ahead. Why wouldn't she just give an unequivocal Roy Brannon answer? No, I was not involved. If I might before responding to the question, Mr Leonard of Express concern twice that Mr Brannon has been unable to attend again this morning, and just to put on record, Mr Brannon is willing to come back to committee, he was unable to attend this morning, but has offered alternative dates to your clerk. In relation to the First Minister's involvement, it is clear that the Minister for Transport took this decision. The First Minister has been clear in her statements to chamber that, again, this is consistent and this was covered by Mr Brannon when he gave evidence at the last session that the cabinet operates under the principle of collective responsibility. We understand that. We are trying to get to the bottom of who was involved in the decision. I am going to move things along and I am going to ask Colin Beattie to put some questions to the panel. Perhaps moving to a slightly different ground, as you may or may not be aware, through all these evidence sessions, the one thing that is concerned me has been the money, follow the money. I want to ask you questions, but at the end of the day, I will be coming back to that particular principle. Looking at the way that the project was set up, there were clearly weaknesses in the project governance when that was established. Just as an example, the programme steering group, chaired by Transport Scotland, did not really have a clear role, yet CMAL was raising issues to them, which went, we don't know where. What improvements have been made since then? The issues over governance clearly led to failures in relationships and possibly directly in the project itself. What improvements have you made for the future new vessels to ensure that they are much more tightly controlled and managed and that those governance issues do not recur? We accept the recommendations of Audit Scotland in relation to project governance. I say that without any implied criticism of colleagues working before me, but there was undoubtedly some departure from best practice. Some examples of that were highlighted in the Audit Scotland report. Having said that, and not to diminish the significance of that, to my mind, there was still good evidence of risk management and escalation throughout the project, albeit that that was not documented in the manner that we might quite have liked. To answer the specific questions about what improvements have we made going forward, so we have enhanced the project groups for defined projects and programmes going forward. We have increased the emphasis on the discipline around recording all decisions and in particular our approach to recording risks. We now take all projects to the investment decision making board at Transport Scotland, as we discussed in the last session. That provides the additional challenge function, the additional assurance for the accountable officer in taking investment decisions on how to proceed. We have introduced greater use of gateway review in all of our projects at appropriate stages in project development, and we also have clearer reporting mechanisms to ministers in terms of project status updates throughout the life of any project. On the specific point around the role of the programme steering group, I think that we accept that the programme steering group did evolve over time, and it is something that we are continuing to work upon to get that right, but it is an active process. It is one of the things that we are looking at through Project Neptune in terms of our review of our sponsorship arrangements of Seamall and David McBrain, but also specifically our project management arrangements. I would say that we have substantially improved, but we are not complacent about that. We are still looking at it and we are always looking for room for improvement going forward. Do you think that the fact that there was apparently no formal escalation process contributed to the failure? I have said that the project steering group did not seem to have a clear role, but the issues that were raised were put past up the line by Transport Scotland and the Scottish ministers on an ad hoc basis. It is important to understand the purpose of escalation and the different forms of escalation that might have taken place. There would have been escalation to the project steering group of project risks and issues where there could have been a collaborative approach to contribute to the mitigation or to resolve some of those issues without them necessarily owning the risks and that is the area where we should improve the lines of responsibility. Ministers were aware of risks when they were material. That was done not on an ad hoc basis, but when it was appropriate to make ministers aware or where there were interventions where ministers would have been able to take action. Is there a general report that ministers were advised on an ad hoc basis? If I could complete the first answer, so that there is then separately escalation under the contract itself. Again, that was subject to evidence in the last session. Under the contract, the PSG would have had no contractual role. It was a contract between Seamall and Ferguson, so escalation of contractual disputes to the PSG or to ministers would have been inappropriate, so contract disputes were governed by the contract itself. What was the point of the PSG? The PSG, again, as described in the last session, is the programme steering group. It intends to bring together all of the projects and programmes within the ferry's investment strategy, just to make sure that, where there are interactions, those are managed well. It is a profile or a programme approach rather than a project-specific approach. The PSG has no role in the management of the contract. It sounds pretty wishy-washy, to be honest. It does not sound like the PSG was of much effective use at all. The PSG was not intended to be a contracting party or to offer a remedy in the event of contractual dispute. It is about the programme of Transport Scotland investment in making sure that the profile of projects that we have and the interactions between different projects are effectively managed and understood by all the parties on whom that would impact. When Seamall escalated issues to PSG, it was a bit of a waste of time. It would not have just been PSG. It would have also been escalated to TS officials and direct engagement. As is clear in the Audit Scotland report, there were points where that was being reported but it looked like the programme might have been recoverable, so at that point we would not necessarily have escalated things directly to the ministers. At later points where it looked like those dates were not going to be made and we were going to slip that as a point where we would formally advise ministers. On your point about improvements made, when we looked at the ILA vessels now and you commented about, do we just update ministers on an ad hoc basis? I think that the approach that we would now adopt would be to advise ministers one week at the monthly or the quarterly reports in from Seamall, even if the project is going well, in a very similar vein to the approach that we take with 801 and 802. PSG was chaired by Transport Scotland because, effectively, it owned that particular group. It seems unclear to me where Transport's responsibility and advising ministers in any formal way, how that's established between the PSG chairs and Scottish ministers. Again, I'll say that the Auditor General is indicating that ministers were updated on the issues only on an ad hoc basis. When Transport Scotland formally advised Scottish ministers in February 2017, already there was missing target dates and milestones? The respective roles are set out quite clearly in Exhibit 2 of the Auditor General's report. Did they work? We've already said that there is room for improvement. In escalating to ministers, Transport Scotland would have been doing that in relation to their voted loan obligations and the obligations for Seamall to report to Transport Scotland in its capacity as the lender under those loans. I don't think that anything untoward should be inferred from the first written update to ministers going in December 2017, because the updates previously related to delays that were reported as being recoverable, and the first time the delays were reported as being irrecoverable or leading to slippage and cardinal dates, ministers were notified at that point. There seems to be some conflict in the information that was coming forward between what Seamall were producing and FML were producing, one rather more optimistic than the other. How were they dealt with when they were escalated up the line to the PSG, Transport Scotland and so on? What interventions were made to try and resolve what had become really a contract dispute? In terms of a formal intervention in the contract dispute, Transport Scotland Scottish ministers had no role in that. We are not there as a kind of quasi judicial authority or as an arbitrator. When there were disputes, we and Chris Hill might invite you to expand on any of this if I miss any of it from memory, but we sought to engage with both parties to understand what is the accurate position here, what information can we use to take assurance in terms of the way to attach to those positions. We encouraged the parties to look at the dispute resolution mechanisms when it appeared that there was an impasse. Again, we could not direct or mandate that. That is all set out under the contract. We also encouraged Mr McCall and Ferguson when they indicated that there was a claim to be made to take that claim to court to allow matters to progress, but that was not done. If we look at the different claims that are being made, clearly dispute management resolution, whatever you want to call it, should have been called in. I think that there was in the contract an option for that, but it was never exercised. Why was that? There was discussion between the parties in relation to mediation. I think that mediator was not agreed a question of reference of the dispute to expert determination, but I can sense that the expert determination was not the appropriate dispute resolution mechanism for a dispute of this nature and quantum, given the binding nature of that process, and that the appropriate dispute resolution mechanism would have been under reference to the court of session. It would have been for Ferguson's to raise that claim, and Ferguson's did not do that. I cannot speak to the reasons why they did not. The belief is that the alternative methods of dispute resolution were inappropriate or could not be implemented. There is always a choice of ADR or dispute resolution mechanism, and you would select the one that is appropriate to the quantum or the nature of the dispute in hand. In this case, litigation would, while best practice is to seek to avoid litigation, in this case litigation would have been the appropriate remedy, and Ferguson's did not take that forward. I cannot speak to their motivation or their rationale for not doing so. To me it sounds a bit odd, but let us move to the interesting stuff, the money. The Scottish Government gave loan support to FML. That is outside of the payments under the contract itself. What was the rationale and purpose of those loans? Were there any particular conditions within those loans that are of note? Were they adhered to and how was it assessed on the success or otherwise of the impact of the loans? There were two loans made to the business. The purpose of the loan is set out in clause 2.2 of both loans. The first loan was more clearly linked to the contracts for 801 and 802, and it was to provide working capital. The business, as you have already talked about, had run into some delays. It had funding issues, so the business was looking for additional funding that could be brought into the business. The second loan, the purpose again, was working capital, but it had a broader purpose. It was looking further ahead to support the long-term viability of the business and to see certain investments made in the business that would enhance its competitiveness and ability to bid for a broader range of work diversification. Did FML's parent company contribute anything at all to supporting FML? They did initially, so they capitalised the business at the beginning. There were various investments made in Ferguson's after CBC took ownership of the business, so they invested in capital equipment, invested in a fabrication hall and new offices, etc. They had put quite a substantial amount of capital in as they had bought the business at the time of the first loan. There wasn't any additional capital going into the business from CBC, but when we negotiated the second loan, CBC committed to putting in a further £8.5 million of capital. In the end, they only put in £3 million of additional debt to the business. That looks at the purpose of the loans. I assume that the unspoken argument is that it was to keep the business going as a going concern and keep people employed there, but were there any conditions that had to be adhered to in those loans and where they adhered to and what measures were put in place to ensure that the intended impact of the loans was achieved? The loans from the Government's point of view, the rationale for the loans was to achieve a commercial return. For the business point of view, they wanted to use that working capital to complete the orders that they had and bid for additional work and invest in the yard. There was monitoring for both loans. It was carried out by independent experts by PWC who did monitoring based on the business performance, cash flows, etc. payments that were going in and out of the business. Then there was a second layer of monitoring that related to the resource plan that the business had developed in May 2018, whether the resource plan was being put into place and whether that resource plan was able to support the intended progress of the contracts 801, 802. We received regular information from the business that was analysed by PWC and by our operational expert, and those reports came to the Government. There were other conditions in the loans that were things like the business was not allowed to pay dividends to its shareholder, etc. There were a series of conditions that were set out in the loans, but certainly one of them was providing information that would allow the Government to monitor the performance of the business. They should have received financial information and so on from FML. Did they receive that? The information would have been provided very regularly to PWC. They would have analysed that information and they had very regular access to the chief executive, to the financial director and they would at some points have been speaking to the business almost on a daily basis. That information is available? That information belonged to the company that went into administration. It would have been received by PWC under the contract that we had with PWC at the time and they would have delivered outputs to us. Many of those are being published on the Scottish Government's website. I do not know if PWC has retained all of the financial information that they received because they do not have a contract with us at the moment, so they would not be under any obligation to retain all of that information, but they will have retained some of it. Perhaps that is something that can be followed up. Let us come to the interesting bit. £128.25 million of public money was paid into one way or another into FML. When FML entered administration and it was nationalised, there was nothing there, basically. There were a few million quids worth of unfinished ships and bits of metal and so on about the yard. What happened to all that money? There are two types of money, so there is money that went to the business under procurement. My colleagues can talk about that. There is other money that went to the business from the Scottish Government under the loans. That was an investment in the business. It was not a payment for a good or a service. It was an investment and the directors of the business took on that money knowing that they would have an obligation to repay the Scottish Government. They were saying that future profits made at the yard would be coming back to the Scottish Government. There are two types of payments. One is payment for the goods and the vessels. The other payment is the business taking on a liability to the Government that they would have to repay with interest. I accept the differential between the two types of payments, but in terms of what went into the company, it is fair to conflate it that they received tens of millions of pounds of public money. What was it spent on, given the fact that the vessels were so incomplete? Where did the money go to? Apparently, according to some of the bits and pieces that I have been looking at from the Auditor General's report, at times there was only a handful of people working on the ships, so it certainly did not go on payroll for a large part of the time. Where did the money go to? I will talk about the loan money that my colleagues might pick up on the contracture payments that CML made. At the point of nationalisation, there must have been some sort of due diligence and assessment done of the vessels. Did that include looking at what had happened to the huge amount of public money that had been put into the business? I will cover the loan part and then I might pass back to Colin to direct the other part of your question. For the loans, money was going into the business and the use of that money was monitored by PWC, so they were producing reports to us. All those reports have been published under the FML documents on the Scottish Government's website. If you look at them, they would show how that money was going into the business and being used. A lot of the money was going into labour resource, so prior to the second loan being made, the labour resource was lower than it needed to be to keep up with the cardinal debt programme. What the business used that money for particularly second loan was to bring back contractors and bring back more staff into the business. PWC would have reported to us how many labour hours were contracted, and you can see that in many of the reports. In a certain month, 25,000 labour hours have gone into several projects that the FML was undertaking. Most of the work would have gone into 8-1-8-2, the labour resource, but some of the labour hours were going into other projects, particularly the air cushion barge and contracts for Involusa. Some of the labour hours would have been going into overheads, etc, bidding for additional work and payments to suppliers. All that information would come to PWC from the same company that was optimistically saying that everything is going to be okay? You mean that the business was saying that everything would be okay? They were not saying that. No, they knew that they had a challenging financial position. What they needed to do to get through it and the discussions that we had with the financial director and the chief executive at the time were really saying that they needed to get the labour resource up into 8-1-8-2, get 8-1-8-2 finished and keep bidding for additional work. We were seeing some signs that they were winning additional work at that point. They had also joined a consortia with other firms bidding for MOD work, and they were starting to build up at that time a ship repair maintenance business where they were taking people out to other locations in Scotland and delivering additional services away from the shipyard. The business at that time was working very hard to complete the orders that it had and to prospect for new work. That was their focus. At the point of nationalisation, there was no sign of any results from the money, not just loans but from the stage payments. If you look at the report from the Rural Economy and Connectivity Committee about the construction and procurement of ferry vessels in Scotland, it makes it very clear that those stage payments seem very odd, because some of them are done out of sequence just to hit a target, but there is no relation to the actual progression that should be in place for constructing those vessels. That is more than evident by the state of them when nationalisation took place. Given the fact that there are concerns that have been raised by that committee, what happened at nationalisation? You took over hugely incomplete vessels, a few million pounds of steel here and there and 128.25 million in total that has been poured into the yard, and there is nothing to show for it. I will pass to one of my colleagues on what was there at the point of nationalisation. We can talk about the progress, and we have described the progress being made by the vessels. I do not think that anyone was under any illusions at the point of nationalisation that the yard had difficulties. We may want to come back to the due diligence that was possible prior to the decision to nationalise the yard, because it was a distressed asset and that has some issues. It is true that we could not undertake the level of technical diligence that we would have wanted until the yard had gone into administration. There were some challenges around that, and I do not think that anyone is under any illusions about that, or has pretended otherwise. Did the nationalisation allow you to take over the historic books of FML? We as the Scottish Government certainly do not have access to that. I do not know what the business has access to. That is a question that we can pose to them. Taking over the business, you did not take over the actual books of the business. We do not have access to the books of FML, no? I think that Willie is anxious to get in on the nationalisation question. I am going to invite Willie Coffey, who I mentioned at the start, to join us via video link this morning. I know that he has got quite a number of questions around nationalisation. I am going to hand over to Willie Coffey to you. Okay, thanks very much, convener, and good morning to everybody in the panel. Yes, my questions were to try to open up a little bit of discussion on the nationalisation issue that was led, finally, there by Colin Beattie. Colin, you were trying to answer that, but I have to ask really. It is a huge decision to have made without a technical appraisal or some kind of technical diligence check at that point. Could you just explain to us, Colin, why that was not or could not be done at that point to give us the fullest picture possible about whether the nationalisation process was the best course of action to take? Thank you. I think that if I can in answering that, just to restate what I hope is apparent, that anybody at the time and anybody representing the Scottish Government here today is driven by determination to spend public money wisely. Any option that we consider for the future of the yard would have had to satisfy the accountable officer tests. The team that looked at the options around the future of the yard and which ultimately prepared the advice for ministers that led to the final decision did take the due diligence that included external, legal and commercial advice. Clearly, we are aware that Audit Scotland said in its report that the scale and nature of the turnaround required was far greater than we could have anticipated given the level of due diligence that we were able to undertake. As I was saying before, I think that this is not unusual in the case of decisions being taken around a distressed asset. Sometimes those decisions need to be taken quickly because there is a balance to be struck between the extent of the due diligence that one can undertake and the need to preserve as much of the value of the businesses as possible. A business with limited cash resources is not able to trade in a manner that would preserve its value. It cannot pay its suppliers, it cannot necessarily provide assurance to its customers. That is particularly the case in a situation like this, the decision to take over the ownership of FML, because the acquisition and the administration are not being driven by the management of the business, and that adds to the complexity. In that sense, yes, the access to the information and to the yard at the time we were making the decision was limited and it undoubtedly did constrain the level of due diligence that we were able to undertake, particularly the operational and structural due diligence that we would have wished to undertake. We were under no illusions that there were issues and problems with the yard. We had worked for two years and more to try to address some of those issues. The level of complexity was not clear because of the level of diligence that we undertook and the work of the turnaround director identified an awful lot of those in the immediate aftermath of moving towards that final, bringing the yard into public ownership. Thank you for that, Colin. Moving forward from that point, did anyone get an opportunity to challenge the revised costings that were tabled? The information that we have in front of us is that the programme review board did not have the opportunity to scrutinise the costings, the revised costings in any great detail. How are we to be assured that the revised costings project were themselves believable, viable, deliverable and so on and so forth? I might ask Mo to refer to some of the work that the turnaround director undertook, but that turnaround director was appointed in August. He was able to do that and provide a lot more detail and information about the state, the kind of things that Mr Beattie was talking about, the progress of the vessel, the level of work that would be required to take it forward, the costs that we expected to incur in the future. Mo, do you want to? I can speak to, as I might be defer to Transport Scotland colleagues on the programme review board point, which was chaired by Transport Scotland. The turnaround director clearly came into the business and set about in his early courses possible establishing the best possible understanding of the state of the vessels. The report that he submitted to the minister in December 2019 that was then put to Parliament set out the scale of the challenge that there was in terms of the turnaround that would be required to the business and also the state of the vessels and the remedial work that might be required, and that remedial work certainly took quite some time. From memory, I think that the Audit Scotland report did reflect that there was no cause really to question those costs from their perspective that they appeared valid in that clearly there has been a lot of work required there, so I don't think that they called into question those costs as such, but I might be defer to Transport Scotland colleagues on the programme review board point. The programme review board, and again I think that evidence has been provided in this and previous evidence sessions to the REC committee in 2020, was again part of the assurance process and part of the diligence to understand the costs to complete. It didn't have a role in scrutinising the costs themselves, it wouldn't have had to have access to the information to do that, but it was put in place from a period of time between August and December 2019 with the intention of making sure that the methodology was appropriate, that the correct questions were being addressed, a sensible approach was being adopted, and that was really intended to be a support both to the turnaround director and when he was preparing that assessment and to Scottish ministers when they were assessing that information. Okay, for my benefit, if you don't mind, colleagues, did the turnaround director effectively do the technical appraisal, the technical diligence check from that point on, which led to the revised costs? Is that what we're saying there? We know that the appointment of the director was quite an expensive one, we've heard that at the committee previously, so could you just clarify, was that the purpose of the turnaround director's role to do that technical diligence check at that point and put the revised costings in place? Yes, so the turnaround director was charged with putting in motion the turnaround of the business and to establish the cost and plan to deliver or to complete the vessels, so he undertook an assessment of the position as he found it and then put in place a plan to take things forward from there. Was that a value for money appointment because we do understand that it was a very expensive appointment to have to make? Yes, it's an expensive appointment to have made. I think it's probably worth flagging up at this point that I suppose he, sometimes he referred to as the chief executive or that is in some way comparable with another head of a public sector organisation, but he was a turnaround director of the business, which is a very specialist kind of expertise, so it's a different thing. It's not permanent, it's paid on a day rate for that particular specialism. His contracted pay was well within a benchmark, which I accept was at a high level. Did that represent value? I mean, it's a challenging role in a very challenging context. I think that it's important not to understate the depth and scale of the turnaround that was required in the business and through the period as well. There's also been some quite uncommon challenges that have been faced in terms of Covid, which has obviously been disruptive to businesses all across Scotland, but it was very disruptive to the turnaround process, as was reflected in the Audit Scotland report. The business was faced with labour shortages, invested time and energy in trying to recruit locally. That has an impact as well, and there's been a succession of legacy issues that have been dealt with. There were certainly real successes in the period of the turnaround director's role. There were smaller vessels that were delivered out of the yard. He put in place a strong senior team, which had a gender balance, which is incredibly uncommon in that sector. Improved processes. There's an archiv continuing improvement that's been handed on to the new chief executive. Importantly, the business was out and about being active in the market as well, restoring its reputation and looking to secure new work. I know that my colleague Craig Coyle will probably wish to come in on the nationalisation issues, but I'll ask the question from you, if I may, convener. In terms of the current position that we're all now in, are we, as the project, now on track and on budget, with revised estimates for completion? How often does the project report about progress, the final progress, who gets reported to? How does the public get an assurance that the revisions that were made to all the estimates surrounding the project are on track and on budget from this point onwards? The chief executive in his letter of 23 March set out the new timetable and the costs for the vessels. That's where some of the more recent delays were clarified and identified, and the announcement of the increase in costs that has been reported was set out. Cabinet Secretary has been clear with the management of the yard, and we work to reinforce this, that we expect and she expects that the yard will deliver those vessels to time and budget. There is a process by which the chief executive and the board of the yard report on a quarterly basis on the progress that they are making and the assumptions that they are making about future delivery. I think that the next report is due at the end of June, so there is a process in place that will keep Parliament up to speed and fully engaged in the progress that the vessels are making. I'm going to turn now to Craig Hoy, who's going to pick up this theme as well, and Morroney may well be able to come in in response to Craig Hoy's questions. Thank you, convener, and good morning everyone. I want to maybe just go back to a question that I would have asked Roy Brannan had he been here. When you were last before us, I asked Mr Brannan whether or not Seymal had been overruled or whether it was a threat to overrule them. He said explicitly that that wasn't the case, but in a submission from the senior management team at FMAW—I'll quote from that at some degree of length just for context—they suggest that there was some degree of overruling taking place. That submission states that our chairman met with the cabinet secretary for finance, Derek Mackay, on 5 June 2018, to insist that the Scottish Government intervene to instruct Seymal to take part in an expert determination process. He was told explicitly that they would not do so, and that Derek Mackay told him that he could not do so because ministers had received a legal letter from the Seymal board threatening to resign en masse if the Government interfered with them as an independent board. Derek Mackay said, and I quote that this would be politically very damaging for the Government and that he would not intervene. Mr Mackay at that stage says that the reason the Government was not prepared to intervene was that, and I quote from their submission, the Government had forced Seymal to place the order with Ferguson against their will. He says that we were not aware at the time of the strength of opposition from Seymal to placing the order with Ferguson. Had we known that this at the time it would have caused us to seriously question accepting the order. Why does Mr Mackay believe that Seymal was overruled? Is he misrepresenting it, is he recollecting it, or is he providing a misleading account of it? If we take it into parts, I cannot speak to why Mr Mackay would have offered that opinion or the information on which he would have been forming that view. Again, to repeat the evidence that was provided the last time we appeared before this committee, based on the evidence available to us, it is clear that Seymal and the board had addressed concerns about the absence of a refund guarantee, but between the period of having done that and the contracts being entered into mitigation was put in place that had overcome those concerns. There was no ministerial direction to Transport Scotland, nor was there a direction from ministers to Seymal to enter into the contracts in the first instance. In the quote that you read out and forgive me, I am not familiar with that. You also made reference to Mr Mackay speaking about a direction to Seymal to enter into expert determination, which we have touched upon earlier today. I do not know Chris if you have any other information on that, but again it would not be for ministers to direct the contracting parties, the dispute resolution mechanisms being contained within the contract themselves. I do not know if you have anything to add. No, nothing on that. Just on the point around the threat of a mass resignation, I think that the chief exec of Seymal addressed us in the REC committee and said that there was no such threat. Obviously there are various conversations taking place throughout the process, but if you start from the premise that this was bungled at the point of procurement, bungled at the point when the refund guarantee came into question, bungled at the design phase, bungled at the point where there were requests for some degree of arbitration between the parties. Mr Mackay again states in the submission from FML management that, in February 2017, the shipyard informed the Scottish ministers that it was highly probable that the vessels would be laid, so at that point there was quite clearly alarm bells being rung. Then the evidence from Mr Mackay and his colleagues goes on to say, our chairman met with the First Minister on 31 May 2017 at Bute House to request her intervention to facilitate a meaningful discussion around the very significant unplanned changes and cost increases being experienced on the two ferry contracts. What readout did Transport Scotland or the Scottish Government get from that meeting and who else would have been present? I cannot answer that today, forgive me, I would need to go away and look at record to understand that again, not in post at the time, but I can certainly look into it to see what records might have been taken. I would say, though, that I don't start from the premise that the procurement was bungled on the basis of earlier answers. We did undertake a review of the procurement exercise, which concluded that both parties had a good understanding of what was expected from the procurement. There doesn't seem to have been anything untoward about the procurement process itself. Two sophisticated commercial actors willingly entered into a contract, neither party being directed to do so, both understanding the contract of obligations that they were entering into. The dispute resolution mechanisms clearly set out in the contract. If the procurement process wasn't bungled, it was rushed. One of the suggestions from the FML side is that it was being rushed because the First Minister, Nicola Sturgeon, was preparing for her first party conference and that they wanted to get the announcement out just before George Osborne announced a £500 million investment in Fastline. Did anybody within the Government or Transport Scotland question why this timetable was being so rushed? I can't speak to the wider political context, but we answered in the last evidence session in response to questions from Ms Dowie about whether the procurement process was rushed. No, it is not my view based on the evidence that I have seen that this was rushed. There is a clear framework for the timing of issuing of alcatel letters, and the contract was not awarded until after the First Minister had made the announcement that seemed to have been identified as the preferred bidder. Forgive me, but I am repeating the answers that I have previously provided. We have not seen any evidence of a procurement process having been rushed at any deficiency in the procurement process itself. I would disagree about bungled to be honest, but looking at the next point, you could allege that it was bungled at the point of nationalisation. Could you just flesh out for the committee? Why did the Scottish Government decide to proceed with nationalisation without the fullest of understandings about the costs and challenges that are facing the vessels? The decision to take the yard into public ownership was driven by the objectives that we have always referred to in the sessions that ministers have referred to. Firstly, that we need to deliver ferries because of the value and the importance of those ferries to our island communities. Secondly, that we want to provide fulfilling meaningful work for a workforce that is incredibly important to the local economy and has really valuable skills, and that we want to safeguard the future of the yard. This is a yard that is the last yard on the Clyde and the only yard, as far as I understand it, in Scotland, that is capable of producing some of the bigger vessels that are in the CalMac fleet. It is an important asset for the country. The decision to take the yard into public ownership would have been based on those objectives that have been maintained and are maintained throughout the process. Perhaps that is a point that we really might want to come in on, but there was a big contractual change that took place there in terms of where the risks for this project lay. In an exchange with Sharon Dowey, Ms Rooney said—I will quote the words back—that this certainly is not a black check. If that is the suggestion, ministers have been really clear with the board, with the management team, with the footwork force that those vessels need to be delivered within the budget that they have been allocated. Each organisation, each part of the Government that is involved in this—Ferguson, Seymal and the Scottish Government—share that obligation to deliver as efficiently as possible with an active value for money so that there is no black check. That was the account that we gave to the committee a matter a few minutes ago. If we go to paragraph 105 of the Auditor General's report, it says that, as part of the new contract arrangements, the Scottish Government is committed to pay in full FMPGs vessel costs, regardless of the final price. That is a blank check, isn't it? I would restate what I said before that we are all parts of Government working together with that eye to efficiency economy. Certainly, the cabinet secretary has been very clear, as I say, with the Yard, the board and the workforce that she expects that those vessels are delivered on budget. Clearly, it is key to the reputation of the Yard going forward. The workforce and the management team are not looking just to build out the ferries, they are looking to the future of the Yard as well, so they are very mindful of their reputation going forward as well. I accept all that, but the point of nationalisation is that there is a material change in where the risk and for future costs overruns. It was shifted on to the taxpayer, essentially. The new Deputy Director of Strategic Commercial Interventions should be able to read a contract. The way that the contract is now effectively read out is a blank check, isn't it? The taxpayer will continue to fund these vessels until they are completed or until some other decision is taken. We would continue to assess value for money, so there is no blank check. Where there to be a suggestion of an increase, we would certainly be advising ministers on what the value for money position was there. That is not a blank check. The new contracts that were put in place, there was a lot of thought that went in behind that to find the most appropriate contractual mechanism, so around that it was about reflecting the accountability structures, as they were, and the different roles of the organisations in this new and quite unusual environment, but also to find the most financially efficient way of doing that. The contracts, as configured, allow the vessels to be appropriately funded out of capital budgets as opposed to resource budgets. We are still taxpayers' monies, but we are basically 5.5 years late and at least £250 million. Where might that end up? Our most current advice from Ferguson and Seamall is that the vessels are progressing in line with the new schedule. I think that we all look forward to seeing those vessels in service on those lifeline routes just as soon as possible. If it is another £50 million, for example, who pays that? Where does that come from? As I said, we continually assess value for money, so there is no blank check here. We would assess the value for money position, should any suggestion of that nature arise. If I may convene him because I undertook the functions of the accountable officer at the time when the report came in in March that the costs of the vessels was going to increase, and at that stage a process takes place. The accountable officer applies the accountable officer tests. One of the considerations that I would have had and the accountable officer in any future iterations around the costs of the vessels would have is whether it continues to represent best value, whether it continues to represent the best opportunity to get those ferries delivered in the reasonable timetable, whether it continues to deliver value for money compared to alternatives. The alternatives, of course, are to stop and to re-procure, and all the timetable increase and the issues for the yard and the workforce that that would bring. Those decisions are looked at. They are taken very seriously, and we do not write blank checks for public money. Just my final question. Is there still the possibility that you could pull the plug on these two vessels? Does the opportunity every time—any decisions that are taken around the financing and the allocation of public money to the vessels—the appropriate tests and assessments are applied? That will happen always, and that will always happen. Yes or no, there is still a possibility that you could pull the plug on these two vessels? We are determined to deliver these vessels. We understand that they are vital for communities, and that will be our focus. It is a yes or no answer. Well, unfortunately, it is trying to draw me into the realm of speculation, where decisions on these things are taken by ministers. I do not think that I am going to be able to add anything to it. Other than that, I know that our team is monitoring the progress of the vessels that we are working very closely with Ferguson's. I also know that we are responsible as accountable officers within the organisation for applying the right tests and making the right recommendations for ministers, and that we will continue to do. So you still reserve the right to recommend to ministers, the pull plug? The decisions on all matters relating to those things are taken by ministers. Okay, thank you. I have just got a couple of final questions to put before the session ends. It goes back to something that was said last time that we had a session with you, which, at the time that Fran Pochiti addressed, but I will be interested to hear Hugh Gillis' view on that. That was that we were told that now all port, harbour and ferry infrastructure projects go through the investment decision making board at Transport Scotland. What was the value threshold back in 2015 that meant that those two vessels did not go through that process? What Mr Brann had said in his last evidence was that big projects at Queensbury crossing, the Abilene-Messon peripheral type things, type level of projects were subject to IDM. At that point, we had not put the very contracts through the IDM process, but part of the learnings that he has put in place and that I have carried on is that such projects will be put through the IDM process and have indeed been put through the IDM process and I have cited Islay as a case in point. At all, Mr Brannan was a roads and highways man, civil engineering and all that. Do they have something against ferries? Why are those big road projects put through that process of scrutiny but a ferries contract to the value of then £97 million? Now we know that it is likely to be of the value of a quarter of a billion pounds of public money was not put through that process. That is correct, but as Mr Brannan has said, and I am repeating myself, we have changed the processes since then and indeed for the Islay vessels, which I think is 100,000, has been put through that process when I came in to post mid-December last year. Sorry, what was the value of the Islay ferries? The overall contract is about £106,000? £106 million, yes. That is a total cost, not the individual contract costs within there. The other tidying up point I had was to go back to those 11th of May emails that you found that morning, Fran Pechitty. When I looked at the email that was sent on 1545 on 9 October, what were the banana skins referred to in the email that was sent by Gordon Wales, then the director of financial management, to your predecessor, Fran Pechitty John Nichols, who was the Transport Scotland official and copied into Ainsley McLaughlin? What were the banana skins that he was referring to? So I can't speak to what was in the mind of Mr Wales when he drafted this email. My expectation would be any kind of procedural issues, but I can't speak to what was in the mind of the author of that email. But do you expect them to have been financial, procurement, challengeable, political? What do you think? It would have been a financial issue because if he's reporting to the Deputy First Minister in his capacity as the Cabinet Secretary for Finance, it would have been a financial issue or just checking that the financial authority was there. Again, I can't speculate as to what that language is intended to mean. I didn't draft that email. Okay, we understand that, and it's a point that we may return to when we have other witnesses in front of us. I'd like to draw this morning's session to a close and thank Morrwney, Colin Cook, Dermot Rattigan, Hugh Gillis, Fran Pechiti and Chris Wilcock for joining us. We appreciate the time that you've given us. As we have mentioned a couple of times, the disappointment that the committee holds because the director general of net zero interim wasn't able to be with us points to the prospect that we may have a further session to explore that a little bit more. We may return to written evidence, but that's for the committee to consider. For the time being, I thank you very much for your input this morning, and I'll now close the public part of this morning's committee.