Post-school funding body landscape simplification: outline business aase

4. Commercial Case

4.1 Introduction

Detailed design of future target operating models has not been undertaken in advance of a decision being made on the preferred way forward. The Commercial Case sets out some of the issues that will have to be considered after this point, notes existing procurements, systems and digital transformation projects underway within SAAS, SDS and SFC and sets out some of the future commercial and procurement arrangements that will need to be followed to successfully deliver the anticipated outcomes from simplification of the post-school funding body landscape (the Project).

There will be two elements to commercial activity in the implementation phase of the project. Scoping work to identify optimal “to be” requirements that will be developed by technical working groups, drawing on a range of expertise, in particular from within affected public bodies within the implementation project. Procurement work that will be the responsibility of whichever public body is the lead customer for any new systems or services that may be required to deliver the optimal “to be” state.

These arrangements will be essential to demonstrate the Project’s approach to securing value for money and the effective management of commercial risks during the implementation, transition and operational phases, and to show compliance with Scottish Government best practice in this area.

4.2 Existing services and systems

The majority of procurement decisions, linked to each option within the OBC, are likely to rest with the Public Bodies. Each of the affected public bodies currently has their own approach to procurement and has developed their procurement strategy, systems architecture and digital development and improvement programmes specific to the needs of their organisation and its current functions.

SAAS, SDS and SFC all also have estates and corporate services approaches specific to the needs of their organisation. All public bodies have shared detailed information on their systems and structures as part of the preparation of this business case.

A key part of the future procurement strategy will be detailed mapping of the “as is” position across all public bodies and taking forward detailed design of the optimal “to be” structure to deliver the preferred option. This provides the opportunity to retain the best of existing systems and structures, as well as considering where there is the opportunity to develop new systems and approaches and to explore the potential for shared services that will enhance efficiency and improve delivery for end users.

SDS

SDS currently delivers the Enterprise Information Service (EIS) - a shared IT service for which SDS is the legal contracting authority, on behalf of their own organisation and the three Enterprise Agencies (Scottish Enterprise, South of Scotland Enterprise and HIE). SDS initially pay for the service and associated staff, and this is recharged to the enterprise agencies on a non-profit basis for their proportionate share of usage. This common IT platform currently supports around c3,000 staff across these public bodies and has the potential for further expansion.

SDS currently delivers Modern Apprenticeships via a public contract award through public Contracts Scotland. The procurement process for MAs usually begins preparation in August with an invitation to tender issued in October and contract awards in February/March of the following year. These contracts are generally agreed for one year with the option of a one-year extension (one-plus-one).

As part of the programme of reform and continuous improvement being taken forward following publication of the Purpose and Principles, Scottish Government officials are considering the optimal future commissioning and delivery models for all apprenticeships. While this may mean changes in future, depending on the timescales for implementation, the current procurement model will have to be able to continue to operate until a new approach is agreed.

FIPS: Funding Information and Processing System, is one of a number of systems that support the development, design and delivery of apprenticeships in SDS. This system, alongside a range of other, systems, web sites, applications and databases are all used to ensure that all relevant monitoring and data sharing arrangements to ensure successful delivery are in place.

SDS has had a significant programme of digital transformation underway to move to a new and more sustainable target operating model by 2027. This includes a programme of estates reduction and digital transformation.

SFC

SFC has also been undertaking a programme of digital transformation in recent years including further development of cyber security approaches, development of a new data collections platform and transformation of analytics capability to improve the accessibility and useability of the data that the SFC collects.

SFC currently handles vast amounts of information via the SAS software platform which handles data management and analytics. SFC’s ambition is to evolve all its data collections into a cloud based Unified Data Platform (UDP) which encapsulates all data received from partners and institutions to create a more cohesive data architecture that can be used, both internally by SFC and shared more readily with partners and the public. The public portal will provide assurance on the quality of data collected and enable modern reporting and analysis.

In managing data flows between the SFC and institutions there are also a number of end-to-end processes and systems that interact with JISC which provides network and IT services and digital resources and support for further and higher education and research institutions.

SFC also has its own finance and funding systems, HR support systems and services. SFC is based within Apex 2 at Haymarket, Edinburgh, and has access to shared meeting space as part of a shared service agreement with Scottish Enterprise in Apex 1, Haymarket.

SAAS

SAAS have an established front and back end-to-end application process and its own case management system, delivering awards and direct payments to over 160,000 students each year. SAAS also has its own dedicated in-house IT Service Desk.

SAAS current systems are developed entirely in-house and have the technical resource capability of adapting all of their core systems to new demands. An example of this is their annual Change of Session project which delivers system updates to reflect Ministerial priorities and new policy demands from across Scottish Govt. SAAS has its own website with an inbuilt online Student Account, which is maintained in-house with the relevant technical resource and also host and maintain the Student Information Scotland website – information hub for students in Scotland covering Further and Higher Education – on behalf of the Scottish Government and Scottish Funding Council who contribute funding to its upkeep. They also have a range of social media channels which are maintained in-house. They have direct routes of contact with all students they fund. Additionally, SAAS have in-house content and graphic design expertise.

All of SAAS key services are fronted by a cloud based Omnichannel Contact Centre with dedicated operational support agents. SAAS Contact Centre solution is capable of handling all types of traditional interactions such as calls and webchats under one platform with the capabilities for multimedia functionality.

As an Executive Agency of the Scottish Government, all SAAS core IT systems are fully approved for use on the Scottish Government network and HR and Finance functions are fully aligned to Scottish Government/ Public Sector policies and procedures. Additionally, SAAS also have a dedicated Complaints & Appeals functions (utilising SG MiCase system for FOIs and Ministerial correspondence) and its own in-house Debt Recovery System.

SAAS front facing applications are available 24/7 all-year round meaning that students can access guidance and apply for support outside of core operating hours. As well as having the capabilities to make continual service improvements to their current applications and services, SAAS have now commenced their Transformation Programme of work which will ensure their services remain fit for purpose for the years ahead. Early successes have been realised through a number of automated improvements to their services which allows automated processes ‘jobs’ to be run outside of operating hours. Automation will continue to be a key component of the Transformation Programme. In addition, SAAS have also launched the private-beta phase of their new online application process for students wishing to access financial support through the Disabled Students’ Allowance.

SAAS is based within Saughton House, as part of the Scottish Government estate in Edinburgh and use SG accommodation as part of a MOTO. SAAS adopt a hybrid working approach as services can be accessed remotely.

4.3 Forward Plan

To simplify the post-school funding body landscape, there is an expectation that current data and systems across the current public bodies need to be streamlined into a more consistent and coherent structure. As there may be a need to procure some new systems and services, or to adapt existing systems, based on the case for change, it will be important to take a coherent, user-centred approach. The anticipated procurement will therefore follow the Scottish Government’s Procurement Strategy and will be supported by SPPD. It will be important that the digital elements of this procurement activity are progressed in line with an agreed digital strategy.

Once a preferred option has been decided and the necessary project delivery structures established, a procurement ‘Forward Plan’ and digital strategy will be created in partnership between SAAS, SFC and SDS and with specialist digital and procurement support from Scottish Government. The ‘Forward Plan’ will act as a live document that identifies a list of systems and services that may be required, and will be aligned to the aims of the Project, as well as in line with the digital strategy principles. The ‘Forward Plan’ will assist with the progress of the Project and help to plan for future procurements, manage contracts, manage resources and understand which projects should be prioritised.

The procurement options will be based on a thorough understanding of existing and future needs as part of this Project. This will require careful consideration, in line with ‘Forward Plans’ and digital strategy to ensure that the impact of these decisions will inform exactly what type of services and systems will be needed. The following requirements are anticipated for any future changes to the post-school funding body landscape:

• Digital infrastructure (to enable better data sharing and alignment of systems and processes).
• ICT services - Hardware and Software.
• Sharing of data and operating frameworks to allow the reformed public bodies to work effectively.
• Media, marketing, design and print services including accessibility services such as easy read.
• Training and development.
• Research.
• Estates.

The procurement requirements will evolve as the decisions regarding the future post-school funding body landscape in Scotland are determined.

This Commercial Case outlines the various approaches to supporting the commercial requirements for this Project and will build on the baseline picture of existing procurements, platforms and plans in place across the public bodies. The detailed procurement and commercial approach for the Project will be developed in partnership by SDS, SAAS and SFC with Scottish Government digital and procurement experts, as part of the detailed design phase, once a decision on the preferred option has been made. This will include specific and relevant commodity level Procurement Strategies, developed by the lead customer for that commodity.

The Scottish Government will work closely with the public bodies to ensure that the following aspects of the commercial case are followed as this Project moves forward.

4.4 Scottish Government Procurement Strategy

The Scottish Procurement and Property Directorate (SPPD) has published its Procurement Strategy for 2024-28^[41]. This sets out how the Scottish Government will deliver on public sector procurement over the next four years and also reflects on the ambitious programme of work to maximise the impact of public procurement in Scotland.

Procurement has a pivotal role to play in the Programme for Government commitments to growing Scotland’s economy and the ambitious 10-year programme of Public Service Reform to ensure that Scotland will be a wealthier, fairer, greener and a more equal country.

The Scottish Government Procurement Strategy notes that the Scottish Government’s key priorities are centred on contributing to Scotland’s purpose of creating a more successful country, with opportunities for all to flourish, through increasing sustainable and inclusive economic growth. This is underpinned by the National Performance Framework, Scotland’s National Strategy for Economic Transformation (NSET) and the annual Programme for Government which sets out the plan for policy delivery, public procurement priorities and legislation over the next year. It ensures compliance to, and delivery of the priorities through the sustainable procurement duty as outlined in Procurement Reform (Scotland) Act 2014 .

The sustainable procurement duty is supported by tools which include the National Outcomes and Indicators and provides a structured approach to purchasing. They help public sector organisations identify opportunities to include economic, social and environmental considerations in contracts and show how procurement activity contributes to the National Outcomes and, in turn, to Scotland’s NSET. Sourcing strategies are developed for each procurement project worth £50,000 or more. This work is supported by the Sustainability Test and, where appropriate, the Sustainable Public Procurement Prioritisation Tool (SPPPT). The contribution of procurement to the Scottish Government’s purpose and priorities is tracked through compliance with the sustainable procurement duty.

In doing so the Project aims to further the Strategic Aims and Objectives such as:

• Tackling Child Poverty through Fair Work First. So that that by 2025, people in Scotland will have a world leading working life where Fair Work drives success, wellbeing and prosperity for individuals, businesses, organisations and society. Public procurement is used to tackle in-work poverty and by extension, child poverty by ensuring job security and fair pay in public sector contracts.
• Climate change. Sustainable procurement tools include indicators and guidance to support Scottish public sector buyers to consider and act on a number of climate change and circular economy considerations. Action is taken on climate change and the development of the circular economy by buying goods and services which reduce emissions, minimise waste and allow for repair, re-use, refurbishment or recycling wherever appropriate.
• Covid recovery. The strategy covers commitments described in Scotland’s National Strategy for Economic Transformation and Scotland’s Programme for Government. This includes using the £16 billion annual procurement spend across the Scottish public sector to boost inclusive economic recovery, support longer term economic wellbeing, and a just transition to net zero. The tools and guidance available will influence and empower buyer, supplier and key stakeholder communities to use public procurement to support an inclusive and green economic recovery.

The strategy is underpinned by detailed guidance on each stage of the Procurement Journey (phases of activity).

4.5 Roles & Responsibilities

Shared responsibilities of this Project rest with the relevant Scottish Government business areas and also with experts within the Public Bodies, noting that SAAS as an executive agency utilise procurement expertise through Scottish Government Procurement. It is important that procurement matters are in line with Scottish Government Procurement guidance and are designed to meet the Projects objectives.

4.6 More Powers Implementation Procurement (MPIP)

The More Powers Implementation Procurement (MPIP) Team within Scottish Procurement and Property Directorate (SPPD) has been established to support core Scottish Government directorates with procurement and commercial matters and will provide support for this Project.

The level and resource profile of procurement support will be regularly reviewed to ensure that Project milestones with commercial dependencies are met. Management of commercial risks is overseen by the MPIP team.

4.7 Commodity level Procurement Strategies

Commodity level Procurement Strategies sets out the particular approach to buying the goods, services and works in a series of procurements. These strategies are bespoke on a procurement-by-procurement basis and include sections on the choice of procurement procedure or potential payment mechanisms as these will be defined in each commodity level procurement strategy to suit the needs of the individual contract.

A high level outline of the principles regarding the choice of procurement procedure or potential pricing mechanisms is set out in table 30 below along with references to supporting documentation.

Table 30: Service Area and Enabling Capability Procurement Strategies

4.8 Service Streams and Required Outputs

Commodity level Procurement Strategies are cognisant of launch dates for each stage of the Projects evolution. The procurement requirements of this Project will evolve as it matures. MPIP will work with the lead customer to manage a procurement Forward Plan, this will ensure that certain priority contracts are tracked as the Project progresses.

The different options to simplify the post-school funding body landscape are likely to require different levels of procurement activity. Therefore, arrangements will be put in place to ensure the Project’s approach to securing value for money and effective management of commercial risks during implementation, transition and operational phases of the reform of public bodies within the post-school funding body landscape, and to show compliance with the Scottish Government best practice in this area, in particular driving forward best value.

4.9 Digital Requirements

All public bodies operating within the post-school funding body landscape have detailed digital transformation and improvement plans underway and fully appreciate the pivotal role that digital technologies can play in enhancing the efficiency, transparency and customer experience of the services they deliver.

The Digital Strategy for Scotland, “A Changing Nation: How Scotland Will Thrive In A Digital World ” sets out the role digital will play and this, together with other relevant digital strategies such as Cyber Resilience underpin the Scottish Government’s approach to digital procurement activity.

When appropriate, the MPIP team undertake pre-market supplier engagement to ensure that the market is aware of future procurement activity prior to the publication of tender documents. This is designed to increase supplier participation in the procurement process and provide increased opportunities for the delivery of innovative digital solutions and de-risk delivery outcomes. In delivering the procurement of IT projects including digital platforms and software the Agile approach is predominately utilised.

4.10 Procurement Decision Making Framework

The Scottish Government’s Procurement Strategy plans will be used as the framework for this Project. This will ensure there are no issues regarding the interdependency between pace and scope of the Project and any ability to secure the required services through these routes to market. This will include a procurement pipeline for all requirements which will set out the:

• Procurement engagement date
• Project milestones (based on anticipated procurement project timescales including for market engagement and mobilisation periods)
• Lead customer
• Estimated £ value
• Risk
• Anticipated procurement resource required i.e. DPO led (based on likely procurement method, value and risk)
• Delivery date

4.11 Governance Relating to Procurement & Commercial Activity –

Commercial Governance

Delegated Purchasing Authority (DPA) is the authority to enter into a contract for goods, services and works and applies to all contracts placed by the Scottish Government. Delegated Purchasing Procedures must be followed for all procurement exercises:

(i) Delegated purchasing authority for low level spend (i.e. contracts valued under £50,000) is supported by the MPIP team where required.

(j) All regulated procurement activity is managed by the MPIP Team. The Head of MPIP has a commercial delegation of £75,000,000 ex VAT and is ultimately responsible for the commercial due diligence of all contract awards up to this value.

The Project governance process will be followed when Regulated Procurements apply, this must follow the steps below:

• The MPIP team develop a Procurement Strategy for every procurement over £50,000 ex VAT. This is produced in collaboration with the lead customer.
• The MPIP team is responsible for writing the Commercial Case in any commodity procurement strategy.

More information about the Project governance mechanisms can be found in the Management Case Section.