Processes for CMAL drawing down capital allocations: FOI release

Information requested

1. Please explain in detail the processes for CMAL drawing down capital allocations from the Scottish Government/Transport Scotland to pay contractors for the completion of agreed milestones relating to vessels 801 and 802;

• In particular, please confirm who is the accountable official within the Scottish Government or Transport Scotland for the process of authorising the capital transfer?
• please confirm if there are limits on capital draw downs, which must receive an added layer of authorisation from Scottish Ministers or Transport Scotland officials? If so, please confirm all instances in which this took place for milestone payments in relation to vessels 801 and 802?

Response

The answer to your question are as follows:

1. The funding of ferry procurement is in the form of loans provided from Transport Scotland to Caledonian Maritime Assets Limited (CMAL). These loans are repaid by CMAL over the useful working life of the vessel.
   
   The schedule of payments, tied to specific milestones in the construction of the vessel, is agreed and included as part of the loan agreement.
   
   Where CMAL is procuring a vessel, they can only release funds in specific circumstances as set by the signed contract between CMAL and the shipyard/ vessel owner For vessel construction, class certification / Independent confirmation is required by CMAL to confirm that work has been completed up to a specific milestone, a number of these have been agreed and set out in the original contract.
   
   Following CMAL confirmation that payment milestones have been reached, CMAL would submit a standard drawdown request with the appropriate paperwork through normal channels to Transport Scotland under the already approved Ferries Loan Agreement for the project to allow payment to be made.
   
   The request and paperwork would then be checked against the agreed spend profile of the project and timescales as laid out in the contract by TS officials. This would then be authorised by the Action Officer and counter signed by the Head of Infrastructure and at this point deemed as approved for funds to be released.
   
   The request would then be sent through to our Finance Team for processing and payment to CMAL. Internally the records are updated to show new spend and balance remaining

• This would be the countersigning manager as detailed above, in this case the Head of Infrastructure. TS Finance only authorise payment once the approval has been ratified by Ferries team
• The limits to drawdowns are specified by the agreed contract/ loan agreement- there is no scope to go beyond the amount specified. Delegated signing authority is used within TS ie – various grades are able to approve payment up to a certain monetary levels depending on their grade or role. This is only for already agreed project budgets which have been previously agreed and approved at a senior level.

To clarify this is NOT delegated purchasing authority, as this does not allow the approver the ability to spend any funds which have not already been agreed under pre-approved contracts at the appropriate levels.

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