Ministers have cancelled a controversial Brexit ferry service contract the Department for Transport struck with a new firm which has no ferries.
DfT said it had made the decision after Seaborne Freight's backer, Arklow Shipping, withdrew its support. Due diligence carried out by external consultants on DfT's behalf had previously found the company to be financially robust, the department told CSW last week in response to an FOI request.
Officials insisted that no taxpayers' money was given to Seaborne before the contract was scrapped.
Transport secretary Chris Grayling had defended the award of the £13.8m contract for the company to provide additional crossings between Ramsgate in Kent and the Belgian port of Ostend to ease the pressure on Dover if there is a no-deal Brexit.
Speaking in January, Grayling said: "The reality is that this has been looked at very carefully by a team of civil servants who have done due diligence on the company and have reached a view they can deliver.”
He added: "I make no apologies for supporting a new British business. I don't think there's anything wrong in the government supporting small business."
It later emerged that the terms and conditions on Seaborne Freight's website appeared to have been copied from an online takeaway.
In a statement issued early on Saturday morning, a DfT spokesperson said: "Following the decision of Seaborne Freight’s backer, Arklow Shipping, to step back from the deal, it became clear Seaborne would not reach its contractual requirements with the government. We have therefore decided to terminate our agreement.
"The government is already in advanced talks with a number of companies to secure additional freight capacity – including through the Port of Ramsgate – in the event of a no-deal Brexit."
DfT sources insisted it stood by "the robust due diligence carried out on Seaborne Freight" before awarding the company the contract.
In a response to a Freedom of Information request from Civil Service World, issued before the decision to revoke the contract, the department said that the decision to not run an open procurement was taken “as part of the department’s procurement for additional freight capacity”.
In a request to name any external companies who had provided the DfT with advice ahead of the contracts being awarded, the response said that law firm Slaughter & May, consultants Deloitte and engineering firm Mott MacDonald were professional advisers for the procurement process.
According to the department, the firms provided advice throughout the procurement process, including director searches and basic counterparty financial solvency checks.
Mott MacDonald also provided technical support in the form of two high-level technical reviews covering Seaborne’s compliance with the DfT evaluation process and the technical feasibility of its plan. Deloitte undertook both financial analysis “to assess the financial robustness of operators” and price benchmarking.
However, the department did not disclose how much was paid to consultants, saying that it plans to publish this information in future.