New bidding process gives Govan hope

The yard's future has been uncertain for some time

The Ministry of Defence has reopened the bidding process for a lucrative roll-on roll-off ferry contract - throwing the Govan shipyard a lifeline.

The four consortia involved competing for the contract, worth up to £1bn 20 years, have four weeks to put in revised bids for the work.

An MoD spokesman said: "We have decided that because we are not satisfied that certain bids offer value for money to invite the four consortia to review their bids."

The MoD wants the revised bids to take account of any changed circumstances.

The ferry order could safeguard hundreds of jobs

The BAe Systems shipyard at Govan, on the River Clyde, which is part of the Sealion Consortium's bid, has seen a change in ownership since the bid was originally submitted.

The spokesman said: "The competition has been very closely fought but we are not satisfied that we have reached best value and so are not in a position to give advice to ministers.

"The consortia now have four weeks to put in the revised bids and we expect to take a decision later this year once we are confident we have best value for money."

The move was welcomed by union leaders at the Govan shipyard and the Scotland Office.

'Positive move'

The MoD order is for six ferries, four of which would be newly built, to be managed by a private operator but made available to the MoD on demand.

There has been speculation a foreign consortium could undercut the Govan bid by some £500m by using cheap labour in former eastern bloc shipyards in Poland and eastern Germany.

The Govan shipyard - whose survival was ensured in a politically high-profile rescue last year - had been assumed to be a front-runner and securing some of the work is seen as vital to the long-term future of the yard which employs 1,100 workers.

John Reid has welcomed the move

Danny Carrigan, Scottish secretary of the Confederation of Shipbuilding and Engineering, said: "This seems a positive move and looks like good news for Govan because it shows that the decision on who has won the contract clearly hasn't been made.

"Govan are obviously still very much in the running despite all the speculation earlier this year."

Scottish Secretary John Reid said: "I am delighted that the MoD has invited the four consortia bidding for the roll-on roll-off ferry contract to submit revised, best and final offer bids.

"This is the fairest way to make the decision on the contract and means that there is still everything to play for.

'Excellent opportunity'

"The contract still has to be won on merit and the consortia have to respond with their final bids.

"This development is a significant step forward and provides an excellent opportunity for the Govan shipyard.

"I have said all along that no decision had been taken on this contract and that the yard at Govan would have every chance to compete fairly for this work."

Under European Union and World Trade Organisation competition rules, non-military contracts must be put out to tender, with the cheapest bidder winning, providing it can fully meet the MoD's standards.

The six vessels are classed as non-military because they are ferries.