Serco confirmed as North Boats operator after judge halts contract suspension

Serco will take over the North Boats from 5th July after a judge today approved the Scottish government’s decision to award the £243 million contract to the multinational services company.

Rival bidder Streamline Shipping had sought to overturn the deal during a hearing at the Court of Session in Edinburgh on Friday, arguing that its proposals were superior to Serco’s.

But in his judgement today Lord Malcolm said he could see no reason to prevent Serco from beginning operations. “The public interest will often subordinate the private interests of an unsuccessful bidder,” he said, adding that it was important to end uncertainty in the affected communities.

Streamline will still be entitled to seek damages from the government if it can prove the tendering process was unfair, but Lord Malcolm said the contract must go ahead while any such action – and a possible appeal – proceeds.

“Long before the outcome it would be necessary to start bidding again,” he said. “All the benefits of a smooth transition would be lost. There would be unnecessary costs to the public by keeping the service going in the midst of all the uncertainty.”

Streamline managing director Gareth Crichton said he was both disappointed and frustrated at the outcome, although he did not say whether the company intended to take up the judge’s offer.

“While we have not yet seen the full detail of the judgement, it is fair to say that our legal team has expressed some surprise at the findings. We will review the judgement in full in due course and move on from there,” he said. 

He added: “We can understand that the issues may look complicated to those outside the detail of the tender process, but the huge amount of uncertainty that remains around the service specification and future operating approach will require to be clarified before too long. We will surely take little consolation from saying ‘told you so’ as matters unfold. For now we would wish to offer thanks to the very many local people and businesses expressing support in our push for fair and equal treatment over the past weeks, and reassure all, that despite the outcome on this process, that Streamline Shipping will continue to serve the Orkney and Shetland freight and distribution markets in the months and years ahead.”

It can now be revealed that Serco intends to run only one of the two freight boats chartered from Seatruck Ferries Ltd from January to May, but will increase the number of sailings during the summer from 18 to 22 a week and retain the second vessel on charter to meet any “sustained changes in demand” in the first half of the year. The current timetable will run until the end of this year.

A series of meetings and discussions in Shetland, Orkney and the mainland is planned for this week, with dates and times yet to be confirmed. Serco will retain the NorthLink Ferries brand and appoint a locally-based management team.

Jamie Ross, business development director at Serco, said: “We are delighted to have been chosen by Transport Scotland to operate the lifeline services to the Northern Isles. Serco has considerable experience in operating critical transport services. We will build on the strengths of the current NorthLink operation and will introduce a variety of improvements to the services.

“We are now letting interested parties know what they can expect from Serco and will be visible in the local communities as we make preparations to start.”

As part of its attempts to ensure a “smooth handover”, Serco will not introduce new timetables until January next year and prices will be kept at current levels.

Mr Ross added: “In the medium term we will propose a more customer focused fares system that will allow passengers to seek lower prices throughout the year if they are flexible with their time of travel.

“Our fares structure will benefit residents, with advance booking discounts and a new loyalty scheme, as well as continuation of a friends and family offer. We will also do more, both through fares and marketing, to attract visitors.

“Passengers will enjoy a better onboard experience with far more choice. We will modernise the onboard catering, entertainment and seating offer.”

He said Serco had listened to the demands of freight customers, including the livestock and seafood sectors. “We would like to stress that while we have made changes to freight ship service schedules according to seasonality, our overall freight service will see an increase of the core summer freight timetable from 18 to 22 sailings per week.

“We will have two freight vessels chartered to us throughout the year which will allow the flexibility to provide extra capacity in the low season if required by sustained trends in demand.”

The Court of Session heard that when it comes to choosing between rival bids, “points” are awarded – up to 80 per cent on the question of costs and 20 per cent for the level of service proposed.

Streamline claimed its proposals for the six year contract were superior to Serco’s because it had been prepared to lay on more freight ships.

The company’s QC, Jonathan Lake, told the court that the government was obliged to ensure that the ferry service between the mainland and Shetland and Orkney provided the best value for money for the taxpayer.

But the court also heard that Serco could run the ferry service at a cheaper price than Streamline.

Mr Lake also claimed that Streamline had lost out because the tender documents had not been clear enough about the level of service expected.

He said: “The correct procedure is for the decision to be cast aside and for it to be re-run again in a lawful manner.”

Solicitor advocate Christine O’Neill, acting for the government, told Lord Malcolm that the government was satisfied that Serco could provide a full and comprehensive ferry service.

She said that civil servants had studied Serco’s proposals and concluded that there was nothing wrong with its plans.

Ms O’Neill said Streamline had a “very weak case” in law for the decision to award Serco the contract to be set aside.