Scottish ministers are to invest a further £14m in the Ferguson Marine Port Glasgow shipyard.

The announcement came after the government confirmed the yard would not be directly awarded a contract to replace CalMac’s ageing fleet of small ferries, with the contract put out to competitive tender.

Ferguson Marine has overseen the long-delayed delivery of two larger ferries for CalMac’s busy Arran route.

Deputy First Minister Kate Forbes said direct award would have meant “substantial risks and uncertainties” due to UK subsidy laws.

Phase one of the small vessels replacement programme (SVRP) will involve replacing seven ferries on the Clyde and Hebrides network with all-electric boats.

It is estimated to cost about £175m, with up to three more ferries to follow in phase two.

The procurement process for phase one is expected to take around eight months, and will be led by CMAL, the government-owned company that procures ships for the CalMac fleet.

The boss of nationalised shipyard Ferguson Marine in Port Glasgow had previously said he hoped the yard would win the contract, securing it a future once it completed the overdue ferries Glen Sannox and Glen Rosa.

But Deputy First Minister Kate Forbes said government analysis had found directly awarding the contract to the firm would pose “substantial risks and uncertainties” for the shipyard and the communities that rely on the vessels due to the “strict conditions” imposed by the UK Subsidy Control Act.

“Instead, we will do everything which is legally possible to support the yard and the workforce to secure a long-term future, which is why we have come to an agreement on initiatives and funding to improve productivity,” she said.

A total of £14.2m is to be invested in the shipyard over two years – subject to legal, financial and commercial scrutiny, which the government said should be complete by the autumn.

The government also said talks were at final stages with BAE Systems about Ferguson Marine being awarded further work on the Type 26 Frigate programme.

CalMac’s ageing small vessels fleet includes a ferry which is now almost 50 years old.

Phase one of the SVRP is expected to deliver the first replacement vessel in the autumn of 2026.

The first phase also includes associated work on ports and shore power upgrades on various routes.

The second phase will look to procure up to three new small vessels of a different design.

The programme was pushed back last year, saving the government £41m, with spending delayed to the 2024-25 financial year.

At the time Finance Secretary Shona Robison said that the programme remained “on track”.

Transport Secretary Fiona Hyslop said said the government intended for the new vessels to be deployed on seven existing routes, but said they would be expected to “bring benefits” to two other routes from the redeployment of existing boats.

“These nine routes currently serve around 30% of the car and passenger carryings on the Clyde and Hebrides network,” she said.

“The new vessels will also be electric, helping us to deliver a significant improvement in emissions and local air quality and taking us towards a lower carbon ferry network.”

CMAL CEO Kevin Hobbs said the tendering process was “great news for island communities”.

He added: “We look forward to delivering the all-electric lifeline vessels over the coming years.”

The small ferries contract would be a lifeline for the Ferguson Marine shipyard, bringing years of work to protect the yard’s 300-strong workforce.

But some would have seen a direct award as a reward for failure, and a sign that – yet again – the needs of the shipyard were being put before those of island communities.

And that political calculation seems to have persuaded the Scottish government to seek other bidders.

They’ve also balked at the legal minefield which a direct award would draw them into.

Ministers were worried at the prospect of a legal challenge from foreign yards, shut out of a bidding competition.

And a direct award could have tied Ferguson Marine up in knots for years to come, forcing the shipyard to do most of its work for the Scottish government in future.

No one at the yard wanted that.

But they’re now facing more uncertainty – desperate for contracts to give them a future.

Ferguson Marine was given a £97m contract for the two large Arran ferries in 2015, a year after the shipyard was saved from administration by businessman Jim McColl.

The two ferries were originally due for delivery in 2018 but have faced repeated design challenges and cost overruns.

Ferguson Marine aims to hand over the Glen Sannox, the first of the completed ships, in the week beginning 19 August.

The Glen Rosa was launched from the slipway earlier this year and fitting out work is expected to be complete by September 2025.

Mr McColl’s firm FMEL claimed the original specification for the ships by CMAL was rushed and flawed, and that subsequent interference had resulted in extra costs.

CMAL rejected those claims, and insisted that poor management decisions and “catastrophic contractor failure” were the reasons for the problems.

Mr McColl’s claim for extra costs were rejected and the deadlock eventually saw the firm fall back into administration in 2019. It was then taken into public ownership.