A Fixed Price Contract – 16 February 2023


Go into any search engine and ask what’s a fixed price contract and you’ll see a definition of a set sum for a task. Straight forward you might think but not in Scotland. Vessels 801 and 802 which still sit in Fergusons Yard in Port Glasgow are stated by the Scottish Government to have been a fixed price contract of £48.5 million per vessel.

As a result, the price of £97 million has entered folk lore akin to what was initially said about the Scottish Parliament Building at Holyrood. But as with that particular scandal, costs for the ship have soared and the supposed fixed price has long since been left in their wake.

But was it ever a fixed price contract? I wrote to John Swinney asking how it could be classified as that when there were clauses in the contract allowing for variation in specification and more importantly in price. The response I got was frankly disingenuous. 

Sticking to the mantra that it was a fixed price reference was made to a standard contract used in the trade. However, that was then followed by the admittance that;

“There were clear and established mechanisms in the contract to enable changes to be mutually agreed and costed.”

So according to the Scottish Government we have a fixed price contract where what’s being provided can vary and with it the cost of it. In anyone else’s book that most certainly isn’t a fixed price contract. Moreover, as we’ve seen the changes to specification have been substantial and as a result the cost overrun massive. 

What’s going on you might ask? This is about the blame game. These were the wrong vessels, a complex LNG dual fuel engine, insisted- upon by CMAL and a contract they were made to rush through by the Scottish Government eager for a fanfare announcement for the First Minister. 

Rather than accept their errors they’ve sought to pin the blame on Jim McColl in particular, and the yard more generally. Yet there’s nothing wrong with either one of Scotland’s most successful businessmen or the workforce. Instead, blame rests with those who procured the wrong ships and rushed to sign a contract lacking in specification. Fixed Price is a smokescreen.