Lessons should be learned from Orkney Islands Council’s purchase of a second-hand ferry from Norway, an internal audit has found.
Members of the local authority’s monitoring and audit committee were told that actions taken in purchasing MV Nordic Sea were adequate.
Nevertheless, there seemed to be some division in what the main takeaway from the audit should be.
While councillors John Ross Scott and Dr Stephen Clackson said the purchase had been flawed, others defended the actions carried out by council employees.
The council’s interim chief executive, John Mundell, compared the purchase of the 48-passenger vessel to buying a second-hand car – sometimes you’re lucky, sometimes you aren’t.
Purchase MV Nordic deemed ‘adequate’ by auditors
He also defended the actions take by the council in purchasing the ferry, saying “hindsight is 20/20.”
The MV Nordic Sea was purchased to replace the nearly 50-year-old Golden Mariana on the Westray to Papa Westray route, at a cost of £1.5million.
Half of this cost was met by the Scottish Government.
However, ever since it arrived in Orkney waters from Norway in April 2020, it has been plagued with problems.
This included being damaged on its inaugural journey and, this summer, being out of action with engine problems.
The audit resulted from “a request by an elected member and a growing level of public concern generated by media reports and social media comments”, the council’s chief internal auditor Andrew Paterson said.
While the report came with no recommendations, it did say the council’s procurement process should be tightened up – which had already happened by the time of the report’s publication.
The audit laid out the decisions taken by the council in purchasing the MV Nordic Sea as far back as 2013, when it was recognised that the Mariana would need to be replaced.
The council had been faced with limited choices for a new vessel, says the report.
The Nordic Sea was identified as a possible suitable replacement.
However, the Norwegian ship didn’t meet UK specifications and costly work would have to be done to prepare her.
Council faced with tough decision
The vessel was made of reinforced plastic, not steel. She was also made for piers that gave much more protection from the elements than those in Orkney.
Two visits to Norway were made by officers from the council and Orkney Ferries Ltd to assess the MV Nordic Sea.
However, with assessments taking place in good weather, there remained uncertainties as to how she would fare in windy weather.
Nevertheless, a positive assessment was given.
In March 2020, the council was faced with either buying a vessel which wasn’t yet suitable for its intended purpose or possibly losing out on up to £750,000 in Scottish Government funding towards the purchase.
However, the costs didn’t stop there.
Over £100,000 was spent on consultants and almost £350,000 was spent on refitting and equipping the MV Nordic Sea.
Full costs weren’t spelt out to councillors
The auditors said these costs weren’t spelt out to councillors.
Councillor John Ross Scott originally called for the audit.
At today’s meeting, he said he’d done this “not to apportion blame but to get to the truth of what happened and learn from any mistakes made.”
He also asked the auditors: “I wonder if anyone can make mention of if we were sold a pup and whether we should carry on with the MV Nordic Sea
“Should we just admit it was wrong and put it into another service and look for another suitable ferry?”
It was noted that this would be a question for a naval architect rather than auditors.
Instead the chief executive, Mr Mundell replied.
He said: “We’re not technical engineers in the marine sector.
“We have to rely on our officer, as we did at that time, with the advice we’re given. in terms of the procurement of this.
“It is a second-hand vehicle. Members will know themselves, if you’re ever buying a second-hand car it can be a risk.
“Risk assessments were taken, a value judgement was made by the experts and the council proceeded on that basis.
Councillor Scott replied: “I accept that. The big thing is that lessons have been learnt from that experience and we can move forward from here.
However, Mr Scott wasn’t the only councillor who intimated that the ferry purchase was a mistake.
Councillors still left feeling a mistake was made?
Councillor Stephen Clackson said: “Ultimately, two lethal elements contributed to what turned out to be a flawed decision.
“The first was a golden carrot of free money from the Scottish Government. The second was the fact that we were being rushed into making a decision.”
Committee chair, councillor Sandy Cowie said he was unhappy with calling the ferry purchase “a flawed decision.”
Again, it was Mr Mundell who replied to the criticisms.
He said: “Contrary to opinion – and the audit reinforces this – a huge amount of effort went into the process.
‘Due process was followed’
“If members recall, this goes back to 2014/2015. We had a vessel that was well past its sell-by date.
“Regrettably, we’re still in that position now with our fleet but that’s another issue.
“The bottom line is there was an opportunity here and due process was followed.
“Yes, there has been tightening up of our procurement processes. In reality, the processes were followed and that’s an important message from the report.
“I genuinely believe that there’s not much more that could have been done under the circumstances.
“There’s 20/20 vision in hindsight with buying a second-hand vehicle. Some people can be lucky, but sometimes they’re not.
“That’s a fact in this case.”
Mr Mundell’s sentiment was supported by committee chair councillor Cowie and the vice-chair, councillor Lindsay Hall, as well as councillor Gillian Skuse.
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