Scotland's shipbuilding industry has been back in the spotlight in recent weeks, after the announcement that seven new ferries for Caledonian MacBrayne will be built by a Polish firm instead of a Clyde shipyard.

The contract for seven new small ferries, which will replace existing boats with more modern electric vessels, is part of CalMac's plan to decarbonise its fleet.

Opposition parties argued that the first minister John Swinney had allowed the contracts to go overseas when the nationalised Ferguson shipyard on the Clyde could have built them.

But how was it decided to build the ferries in Poland? And could the Scottish Government have intervened?

Ferret Fact Service explains.

How does the tendering process work?

CalMac is a publicly-owned company, so ferries built for use on its routes are meant to go through a system of public tendering.

This means that Caledonian Maritime Assets Limited (CMAL), which owns the ferries and land-based assets used by CalMac, puts out a public notice to say it needs a number of ferries to be built, and then private companies bid for the contract to do the work.

The contract for seven new ferries was announced in July 2024, with CMAL initially selecting 12 bidders, including Ferguson.

While the Clyde firm made it onto the final shortlist of six, the contract was eventually handed to Polish firm, Remontowa. The tender is worth £175m and will see seven new "loch class" vessels built to replace ageing boats currently serving routes in Scotland.

Could Ferguson have been directly given the contracts?

When the plan to build seven new vessels was announced, there were calls for the contract to be awarded to the Ferguson yard, in order to help secure its future.

It is possible under certain circumstances for the open tendering process to be bypassed. This is known as a direct award.

Legally there are only very specific cases where this can be used. The Scottish Government gives some examples of how a direct award could be given out, including "extreme urgency due to unforeseen circumstances", "covering the immediate need where there is only one possible supplier", or small modifications to existing contracts.

In an exchange with Labour MSP Claire Baker in the Scottish Parliament, deputy first minister Kate Forbes said that a direct award of the ferries contract to Ferguson "would have introduced substantial risk" that the contract could have been legally-challenged by other shipbuilders. She said it could have led to the "worst of both worlds, with the boats not being delivered to islanders and Ferguson Marine not getting the contract because the matter ended up in the courts".

According to a report by public finance watchdog, Audit Scotland, the small ferries contract went to public competitive tender after "legal advice that a direct award would be in breach of the conditions set out in the UK Subsidy Control Act".

Subsidy control, which was previously called state aid when the UK was part of the European Union, sets rules on how public money can be used. It regulates when a state public authority can and cannot give financial support to an enterprise, giving them an economic advantage.

It is against the law for public money to be spent to give one group or company a competitive advantage over others, unless strict criteria are met.

The UK guidelines state that "subsidies should be given in the public interest" such as to address a market failure.

According to the Scottish Government, legal advice suggested handing the contract directly to Ferguson without an open tendering process would have fallen foul of these rules.

What happened to Ferguson?

The Ferguson shipyard, which has been producing ships on the Clyde since the start of the 20th century, was forced into administration in 2014. It was then taken over by a company owned by Scottish businessman Jim McColl, and renamed Ferguson Marine Engineering Ltd (FMEL).

In 2015, it was announced the new company had beaten six other bidders to win a £...