Brit outsourcing giant Serco was today named preferred bidder for a six-year £450m ferry and freight services contract between the Scottish mainland and the Orkney and Shetland islands.
Serco has been running the service since 2012 and there is an option for Scottish ministers to extend the new contract for a further two years, valued at a further £160m.
As part of the deal, the company has promised a series of improvements to the service, including a smart ticketing system and plans to roll out a new "demand analysis and forecasting model to inform and improve accuracy and confidence in passenger and freight requirements".
Scottish minister Paul Wheelhouse said islanders will get a 20 per cent discount on cabin fares on Aberdeen-Kirkwall-Lerwick routes from January. There will also be a three-year fares freeze for islander passengers, non-commercial vehicles and cabins on those routes.
He added: "The Scottish government remains fully committed to high quality ferry links to the Northern Isles so I am delighted to announce Serco NorthLink as the preferred bidder to operate these services for a further eight years."
Rupert Soames, Serco Group chief executive and grandson of Winston Churchill, said: "We are delighted to have been awarded this contract by Scottish ministers.
"We are very proud of our track record over the past seven years, during which time we have improved almost every aspect of the lifeline service for the communities and businesses of the Northern Isles, while also reducing materially the annual subsidy and thereby reducing the burden on the Scottish taxpayer. We look forward to further improving the service in the coming years."
Back in July, Serco – which operates a number of large government contracts – was fined £22.9m by the UK's Serious Fraud Office over electronic tagging contracts. Along with G4S, Serco allegedly charged the Ministry of Justice for monitoring offenders who were already in jail, dead or had left the country. This was in addition to a £70m settlement paid by the firm to the department in December 2013 and meant Serco would not face formal criminal charges.
At the time, Soames said the company was "mortified, embarrassed and angry" that it had understated the level of profitability of its electronic monitoring contract in its reports to the MoJ six to nine years ago. ®