In September 2015, the Commerce & Employment Department submitted a policy letter to the States, recommending the replacement of the fisheries patrol vessel, the Leopardess. I was not convinced that the replacement was necessary nor the highest priority. There were also concerns about the process that has been undertaken in reaching the recommendations. Myself and various other Deputies has called on the Department to withdraw the policy letter before the debate, but they had refused to do so. Consequently, I laid a Sursis against it seeking an independent survey and analysis as to whether it would make more sense maintaining the Leopardess, or to build a new vessel. The Sursis was passed.
My opening speech is below.
Sir, Members will be aware of the concerns that have been raised by various parties as to the recommendations within this policy letter since it was published. Whilst we have to be cognisant of the fact that some may have a financial interest in a different decision, that has certainly not been the case of the vast majority.
I am laying a sursis because of the uncertainties arising, not only from the representations made by those with marine expertise, but also from the contents of this report. Firstly, I question the immediate need for replacement. According to the outline business case attached to this report the vessel was surveyed by – excuse my pronunciation – Van Woerkom, Nobles & Ten Veen in 2012 who concluded that, ‘She is in good, to very good condition for her age. The… engines and hull life could last for a further 10 years… if she is maintained to the highest standards… ‘ And unsurprisingly with age can come ‘an increasing risk of age related failure.’
I therefore question the urgency of a replacement now. Those with a knowledge of the vessel believe that with the appropriate planned maintenance, the risk of age-related failure and emergency repairs is reduced and that there are many serviceable years ahead for the Leopardess. This is a vessel that only undertakes 600 to 700 running hours a year. To replace a vessel in such a condition concerns me, that the best value for money option has not been chosen.
Secondly, I am concerned that the tender process did not give a sufficient opportunity for local businesses to tender. The decision to choose an aluminium hull at an early stage, as well as the fact that the requirement for prior experience meant that all other potential bidders were effectively disqualified, does not bother me that due process has not been followed and therefore the best value for money option has not been chosen. Commerce & Employment, of all Departments, has a duty of care to ensure that local businesses are given every opportunity to do the work they want. After all, its mission statement is, ‘To strive for the creation and maintenance of a dynamic and diversified economy for the benefit of the island community’. And surely marine trades are areas of expertise we should be encouraging.
Thirdly, I have concerns over the costings that have been used in the policy letter as follows: capital costs that calculate increase at higher than the rate of inflation, but maintenance costs are not. It is unclear why that is the case. Option 6 is to replace at the end of the vessel’s design life in 2018, but capital expenditure is included into 2019 and 2020.
Similarly, option 8 is to replace in seven years’ time, but capital expenditure is shown in 2022 and 2023. Both changes would reduce the capital costs and maintenance over the period. The level of maintenance from refit costs are not explained. In terms of the refit, it is unclear whether this has been assessed by an independent surveyor or a marine engineer.
Now, the outline business case states that the costs of the Leopardess since 2007 have been approximately £500,000, but it is not clear whether all these costs arise from general maintenance or include specific one-off incidents that should be excluded in any assessment of the costs of running the vessel.
There are also other uncertainties that arise from claims that have been made by local marine experts who hear that engines could be procured at significantly less cost than quoted in the report, with the work being able to be done here. The outline business case shows on page 2335 that the different between the discounted total whole life cost of option 6 and option 8 is only £170,245 or 4% of total cost, which could be considered negligible given the uncertainty surrounding estimates, such as a discount rate of 3½% compound for MPV, building inflation, which has been set at 6%, and the maintenance cost.
These issues raise enough uncertainty to me that we should not be making any decision today to approve the recommendations in this report. And given the fact that we have a funding deficit on the Capital Reserve I believe extra care and caution is needed to ensure we do not approve a project which may not be of the highest priority. Whilst we could just reject the recommendations, this will give no direction to Commerce & Employment. Accordingly, this sursis seeks to have the Department commission an independent survey to establish the Leopardess’s present condition and future likely maintenance costs, to see whether she should be replaced now or not. At the same time, it also makes sure that if replacement is found necessary that the tender process is reopened.
I request that Members support this sursis.