Scottish Ferries Procurement Review & Teckal exemption

Circular No: NP/021/17


Our Ref: S2/1/2/3

3rd February 2017

Dear Colleagues

Scottish Government review of ferries procurement and the ‘Teckal’ exemption

Further to circular No.0147/16 of 19th May 2016, the Transport Minister, Humza Yousaf MSP announced in the Scottish Parliament yesterday a “review of the legal, policy and financial implications” of the future procurement of Scotland’s publicly contracted ferry services.

The immediate impact of this decision is a pause in the re-tendering of the Gourock-Dunoon contract which was due to be awarded in the spring, with incumbent public sector operator Argyll Ferries in the running to retain the contract. The Scottish Government is planning to issue a nine-month extension to Argyll Ferries’ existing contract which was due to expire in June. Your union is seeking urgent confirmation from the Scottish Government of the exact duration of the contract extension and continuity of existing contractual terms and conditions of Argyll Ferries staff.

On the Northern Isles, Serco NorthLink’s current contract expires in April 2018. The Minister told MSPs yesterday that the review would look at any extension required to the existing NIFS contract and that “Discussions have already begun with Serco for a possible extension of the contract.”  Your union is seeking urgent confirmation from the Scottish Government and Serco NorthLink of the exact duration of any contract extension and continuity of existing contractual terms and conditions of NorthLink staff.

CalMac’s contract with the Scottish Government for the Clyde and Hebrides Ferry Service started in October 2016 and runs for a maximum of eight years until September 2024. Any changes to procurement policy will not affect existing contractual terms and conditions on CalMac but the review will cover governance structures at CalMac and parent public sector company David MacBrayne Ltd, as well as Caledonian Maritime Assets Ltd. The Minister has committed to providing the union with further reassurances over any possible implications for CalMac staff on the CHFS network but, again, members’ existing contractual terms and conditions will not be covered by the review.

The Minister also announced yesterday that the European Commission has accepted the union’s legal advice that public contracts for Scottish ferry services do not have to be subject to regular re-tendering requirements in EU Maritime Cabotage Regulation 3577/92. This follows the joint approach the RMT and Scottish Government made to the European Commission in light of the legal advice your union had received on the possibility of applying an exemption for Scottish ferry contracts under ‘Teckal’ case law.

In essence, a Teckal exemption removes the legal obligation on a public authority to tender public contracts when it can be proved that the public authority can provide the services itself, subject to certain ‘control’ and ‘function’ tests. The union’s legal advice, provided by European procurement law specialist Gordon Nardell QC in November 2015 is that this exemption could be applied to Scottish ferry contracts tendered by the Scottish Government. I would also point out that the union’s current legal advice is clear that successfully applying a Teckal exemption would not contravene European rules on state aid.

The Scottish Government review will specifically look at the case for the Teckal exemption. RMT will be involved in the review and will continue to press for an exemption for lifeline Scottish ferry services from damaging interpretations of EU competition and state aid regulations. The Minister confirmed that the RMT, along with RMT Scottish Parliamentary Group member David Stewart MSP would be invited to talks as part of the review in the very near future. The STUC and the other Scottish ferry trade unions, Nautilus, TSSA and Unite will also be involved in the review.

The union is under no illusions over the complexity of the task ahead but we are ready for this review and will make the case for a Teckal exemption to be applied at the earliest opportunity. As such, yesterday’s announcement is a welcome development and bodes well for workers and passengers on Scotland’s lifeline public ferry services.

I would be grateful if you could bring the content of this circular to all members in your Branch and you will be updated with further developments.

Yours sincerely


Mick Cash
General Secretary