Research Data Scotland – Full Business Case

Commercial Case

Introduction

The Commercial Case sets out the implications for procurement as developed from the initial work on the RDS OBC. It considers the requirements, proposed sourcing options, commercial arrangements and identified risks at this stage.

The Commercial Case also provides further details on the practical aspects of how RDS will be established to achieve its organisational objectives. As part of this, contractual and legal considerations are set out.

As mentioned above, a LWG was convened in 2019 comprising representation from service partner organisations, along with solicitors contracted by SG. The remit of the LWG is to provide information and advice to support the process of identifying options for legal models for establishing RDS as a legal entity, including any contractual and regulatory requirements. It will also reach agreement on the form of founding partners in RDS, to align with strategic objectives for RDS and for the participating organisations, including future partners.

Further legal advice was forthcoming from legal advisors and partners and has been included in the FBC. This work will continue through the development of RDS.

RDS Commercial Structure - Company Limited by Guarantee (CLG)

Based on the work conducted through the SOC, OBC and the FBC's Strategic Case and Socio-economic Case, the preferred approach is for RDS to be delivered is a Joint Venture company – to be a Company Limited by Guarantee (CLG) in order to seek charitable status. A CLG is a legal form of organisation, which is regularly established to conduct business for the benefit of the community.

As a CLG, RDS will be a "not for profit" entity on the basis that any profits arising will be reinvested in its public mission. The organisation may "trade" but only in accordance with its objects. A CLG may be charitable, in which case if approved by HMRC certain sources of income may be exempt from corporation tax.

Given these factors and the legal advice, RDS was established as a CLG on 8 October 2021, company number SC677016.

Governance Arrangements and Legal Status of founding RDS partners

The socio-economic case presented options for delivering RDS via alternative legal structures, which were compared to the status quo and identified a joint venture (JV) as the preferred vehicle for delivering RDS.

Potential founding partners in the JV have been confirmed as SG, PHS and the University of Edinburgh. Other academic institutions remain interested in joining and will be able to become partners in the future.

In light of the founding principles of RDS and its public mission, initial partners are other public bodies. Users of the services provided by RDS may also choose to participate, and the network of Regional Safe Havens based in academic institutions will have the option of joining: some Scottish universities have already shown appetite to be involved in the governance of RDS. Public sector data controllers might also wish to hold a stake in RDS. The LWG has supported these considerations and has agreed a workable and effective set of articles with RDS being established as a JV.

Contracting Arrangements under the Existing Service Model

The existing commissioning arrangements comprise a set of bilateral agreements between the various partners, depending on their role and involvement.

The arrangements do not lend themselves to a ready appraisal of the effectiveness of the individual services, either within each of the contract terms, nor at a more strategic level across the system. Various funders contribute to different services and risks are not borne or aligned in a way that promotes efficiency, stability and sustainability.

Some of the key aspects of the current model are as follows and a diagrammatic representation is shown overleaf

• The National Safe Haven was commissioned by NHS NSS to be delivered by EPCC, University of Edinburgh and this remains the case; this contract has transferred now into PHS from NSS. A set of service agreements and legal contracts underpin this relationship

• Chief Scientist's Office hold an existing SLA with PHS/eDRIS for delivery of the National Safe Haven and it is envisaged that this funding be channeled via RDS. This will facilitate a single structure

• SILC was defined through a Memorandum of Agreement (MoA), which outlined a governance structure for the collaboration

• A number of Service Level Agreements (SLAs) were developed between the groups operating within SILC, with each individual organisation reporting to the SILC-SMB

• A set of collaboration agreements, lease agreements and licenses to occupy the space at Nine BioQuarter were also developed for FARR, ADR-S

• FARR IT infrastructure – shared infrastructure resource.

An improved commissioning framework will be developed for RDS in collaboration with partners and with the support of the LWG.

Proposed RDS Operating/Commissioning Model – Required Services

This section describes briefly the legal structure and core components of RDS.

The structure of RDS is based on RDS having its own staff supported by a commissioning model with specialist services provided to RDS by other organisations. Various assumptions on the future operating model have been made and will be tested with service partners and key stakeholders. It is assumed that:

• RDS will focus on a range of data sources and types – recognising its core purpose, it will have a strong focus on health and social care data, but will operate with other data sources
• It will act as a 'shop-front' for all types of data access request by researchers, with most data continuing to be held by relevant partners
• Data sharing agreements or data processing agreements as appropriate will be put in place with each of the organisations whose data RDS makes available to others will be put in place between relevant partners
• RDS will have its own governance structure with a Board of Directors established from RDS's partners as well as independent representatives
• It will commission all services and staff needed to operate, principally:
  • eDRIS (from PHS) – customer support
  • EPCC computing infrastructure and support (from University of Edinburgh
  • NRS – data indexing and matching required for data linkage projects
  • SG – data linkage and data acquisition.
• The exact details of commissioning arrangements, priorities and structures are yet to be agreed. It may be possible for RDS to function in the short term with commissioning arrangements based on the status quo with more detailed contractual agreements put in place later, once the RDS service development work has been progressed.

Discussions have started with the Regional Safe Havens (RSHs) in Scotland to explore their current offering and potential collaboration with RDS in the future. This work will also set out a short term plan for ensuring the RSHs are appropriately joined up with RDS in the short term when the RDS service is launched.

Contract Structures

The following key contractual arrangements will need to be put in place to implement the preferred commercial solution. They are not considered to be a complete list of considerations and are subject to full and thorough legal review by appointed legal advisors.

• Stakeholders/Members' Agreement – between Public Sector stakeholders who are RDS partner organisations. This agreement will set out their respective roles in the governance of RDS
• Service Agreements – with commissioned service partners
• Lease – if required, provided from an office provider to RDS to provide a space from which RDS staff will operate.

Indicative Terms & Conditions will require to be drafted, setting out the key contractual clauses between RDS and its service providers – it is anticipated that these will be developed in detail throughout the procurement phase of the Project. SG is also obtaining specific legal advice to ensure compliance with relevant regulations, including:

• Vires (legal capacity)
• State aid
• Procurement regulations
• Employment Law
• Regulatory Law
• Financial treatment
• Office for National Statistics (ONS) treatment.

The proposed commercial structure should be subjected to a Legal Compliance Check to ensure compliance with relevant legal requirements.

Procurement Strategy

The procurement strategy for RDS has been developed on the basis of several assumptions:

• It has been assumed that the necessary inputs and functions required to be commissioned by RDS from SG, NRS, University of Edinburgh and PHS can be contracted for directly. Following legal advice, the basis for compliance with procurement requirements includes:
  • principally, reliance on Regulation 13 of the Public Contracts (Scotland) Regulations 2015 on the basis of a collaborative arrangement in furtherance of public duties and objectives.
  • that certain contracts will be capable of direct award in compliance with Regulation 33 of the Regulations for technical reasons
  • o the existing arrangements under the SILC model.
• RDS will have in place appropriate service agreements with each of the bodies from which it obtains commissioned inputs
• It is considered that the proposed remit, scope and funding arrangements for RDS will be structured such that no state aid issues arise
• RDS will have its own staff with an initial complement of approximately 15 based on new permanent hires, secondment of some partner staff and some temporary staff
• Some partner staff resources and assets providing a service in the current operating model would not "transfer in" to RDS but remain in their current organisation with RDS, in effect, paying for their use
• RDS would lease particular premises. A Location Review has been undertaken and the preferred option is the Bayes Centre in Edinburgh
• RDS is to be put in place without requiring legislative measures.

A draft procurement strategy is included at Appendix Four: It sets out what components RDS requires and how it will go about procuring them. It is assumed that RDS will be a contracting authority and will have to adhere to the appropriate procurement legislation. This will mean there is likely to be a time lag between a requirement being identified and its procurement. This should be included in any planning assumptions.

A key part of the RDS operating model is that it will commission services such as indexing, safe havens, and computer infrastructure from partners. Given the importance of data security and public trust it is assumed that these services will only be able to be sourced from established and trusted public sector partners. These arrangements will require contractual terms to be put in place with partners. As further details of the RDS operating model become apparent, the procurement strategy will be updated and will remain a live RDS document.

Throughout the process, it is recommended that SG has externally appointed technical, financial and legal advisers in place to act in the best interest of the public sector and ensure that the procurement specifications are sufficiently detailed to achieve the desired outcomes. In order to maximise the recoverability of RDS expenditure, it is anticipated that RDS will be incorporated and VAT registered in advance of becoming operational.

Based on the assumed operating model, for RDS to function as a service for data controllers and users, the following components will require to be sourced:

Table 12: RDS components

RDS component - Staff

Remarks

Hiring new technical, operational and managerial staff.

RDS component - Office space

Remarks

Includes rent, rates, and related utility costs. This could be a shared office space with a suitable partner organisation or a stand-alone facility rented from private or public sector.

RDS component - ICT equipment

Remarks

Staff computers, telephones, printers, software and related infrastructure will have to be procured through the relevant procurement frameworks including shared services solutions.

RDS component - Office equipment

Remarks

Office fixtures and fittings, consumables and amenities will have to be procured through the relevant procurement including shared services solutions.

RDS component - Professional services

Remarks

RDS is likely to require legal, insurance, consulting, financial and tax advice during planning, transition and subsequent RDS business as usual. These can be procured through the relevant procurement frameworks including shared services solutions.

RDS component - RDS operational

Remarks

RDS specific activities such as indexing, parallel computing capability, website build/maintenance. Most likely to be commissioned from other public sector organisations through service level agreements (SLAs) and/or Memoranda of Understanding (MoU). It is expected that due to the specialist nature of these services, these activities will fall under specific exemption from procurement rules.

Key contractual terms and risk allocation

The commissioning model will require contractual terms to be agreed between RDS and the partners who are supplying it with services. RDS will require legal support to achieve signed contracts. The key contractual terms will set out the requirements of the service, availability, response rates, and payment terms. The relative risk allocation between the parties will be included in the contractual arrangements but, given the principles of partnership, the risk allocation should be equitable whilst agreeing who is better placed to manage/bear the risk.

There will also require to be contractual arrangements to be established between RDS and the data controllers to establish how RDS will be able to use delegated authority to provide access.

Procurement route and timescales

Procurement is likely to be through four main strands as follows:

• Procurement of private sector goods and services: this could take up to three months from development of the specification to the goods/services being delivered to RDS
• Staff recruitment: this may need to be supported by a private sector recruitment firm. Timescales from job specification to start could be as much as five months (including successful candidates' notice periods). RDS could consider transfer and/or secondment opportunities from partners to accelerate this process. Interim staff may be required int eh short term although this will be a more expensive option
• Office space: the choice of office space will depend on what is available on the market
• RDS operational capabilities: these will need to be commissioned from partner organisations and it would be sensible to identify which organisations could meet RDS's requirements. If there were several potential partners then some form of appraisal would have to be undertaken to determine who would be best placed to meet RDS's needs. RDS's legal advisors would have to agree some form of SLA and draft the necessary agreement. This whole process could take three to four months. Because of the specificity of these services and the importance of using public data correctly, it is assumed that these services will be exempt from competitive procurement competitions.

Efficiencies and Commercial Issues

The following commercial issues will need to be considered in arriving at a preferred commissioning model:

• The market in Scotland and supply of the required specialist skills is limited and requires investment.
• Requirements of specialist data holdings
• Statutory functions which mean there is a limited set of potential suppliers
• Tax treatment of alternative partnership and contracting options
• Regional versus National level demand and how to configure supply to meet both.

Conclusion

The Commercial Case lays out the initial procurement requirements and commissioning considerations for RDS. Discussions with the LWG and stakeholders will progress toward a preferred set of arrangements for participation in RDS and for optimal commissioning arrangements consistent with those preferences. Initially, it is assumed that the commissioning services will closely resemble the current services provided by partners. Refinements to the arrangements are likely to be necessary as the service development work is undertaken and the TOM implemented.