Business Case – Establishment of a New Sustainable Aquaculture Innovation Function (SAIC)

6. The Management Case

The Scottish Government has assessed the management, governance, assurance and reporting arrangements required to establish and operate the new SAIC entity from 1 April 2026. This section demonstrates that robust processes, clear accountability structures and experienced delivery partners are in place to manage the transition and sustain long-term performance. SG is confident that the preferred option is deliverable within the required timeline and will maintain continuity of innovation support across the aquaculture sector.

6.1 Programme and project management

Independence and operation without the backup of a host body will introduce new responsibilities and enhanced reporting requirements. SG will oversee the transition and ensure that the new entity operates in line with public sector expectations for transparency, accountability, and value for money. The current SAIC team are highly experienced in servicing funders and management boards including the production of papers, keeping of minutes, supporting formal decision making and reporting to stakeholders.

Furthermore, the existing SAIC team has over a decade of experience delivering complex multi-partner research programmes, managing funding, and supporting governance processes. This provides high delivery confidence.

Project roles and Responsibilities

• Deputy Director, SG MEC portfolio – SRO Accountable for the project and for ensuring that it meets its objectives and delivers the expected benefits.
• MEC portfolio business manager – Financial Management Responsible for managing the payments to SG.
• SG Aquaculture Team – Project Management Responsible for overseeing the day‑to‑day operations of the grant management, including grant delivery to SAIC, and ensuring outputs/outcomes from SAIC are aligned with the Grant Agreement.

The CES Business Case provides further details on these issues.

Early actions

Following approval of funding and before the organisation becomes fully operational, SG will ensure that key enabling actions are completed including:

• Formation of board.
• Recruitment of staff team.
• Appointment of scientific panel and stakeholder committee.
• Recruitment of a new senior officer.
• Development and agreement of working policies and procedures.
• Opening of bank account(s).
• Selection and contracting with external service providers e.g. IT, HR etc.
• Review and agree work programmes and funding priorities before publicising associated funding opportunities.

These activities are essential to ensure operational readiness by 1 April 2026. Initial set up costs can be viewed in more detail in Annex D.

Staffing

It is assumed the current staff model will be retained with a new Senior Leader appointed and with a strengthened Finance function for a headcount of around 7 full and part time posts. Existing SAIC staff will, subject to the approval of the new Directors, be recruited to the new company conditional on the agreement of funding and this would be supplemented by additional open recruitment to any vacant posts anticipated in the structure.

The current team has considerable operational experience of the sector and of managing an organisation delivering across all the future entity’s anticipated responsibilities. This includes:

• organisational governance including servicing the board and the Independent Scientific Panel
• management of organisational and project finance
• managing project selection and delivery
• knowledge exchange programme
• operation of SAIC network and consortium

Moving to an independent structure will place additional reporting and financial management responsibilities on the team and so a strengthening of the finance / admin function is proposed. Health & Safety, HR and IT support will be purchased from external providers alongside some financial management and accountancy services (e.g. payroll)

The team is expected to be:

• Innovation Manager / Senior Leader
• Project Support Officer
• Finance Manager
• 2 x Innovation Officer
• Knowledge Exchange Manager
• Knowledge Exchange Officer

Existing job descriptions are already in place within SAIC although these will need to be re-examined and updated for the new operating context. No CEO is currently in post and the development of an entirely new Job Description is recommended. The team is also carrying an Innovation Officer vacancy.

HR

HR support is currently provided through UoS and costs are recovered from SAIC. A contract with an external partner is assumed for administrative and policy support, training and indemnity cover e.g. Peninsula or Croner. A first point of contact / internal management would need to be agreed.

6.2 Change management

SG will oversee a structured change management process to ensure continuity of service as the current SAIC (hosted by UoS) transitions to the new independent legal entity. The aim is to avoid any hiatus in innovation support, knowledge exchange activity, or project delivery. SG will support the new Board and staff through the transition period and ensure that early governance functions are established quickly and effectively.

Proposed SAIC structure:

The organisation will operate as a Company Limited by Guarantee, with Members drawn from industry, academia and the wider community. Public sector agents including SG, CES, HIE will have observer status but will not be Members of the Company engaging with the company in line with relevant funding agreements and their own strategic aims and corporate plans. This structure ensures independence while maintaining appropriate oversight.

The Directors of the Company will be elected from the membership and be subject to normal rules of such a Company Limited by Guarantee. The draft Articles of Association set out the basis on which Directors may be appointed and the terms of service. The Articles, and grant funding agreement, will encourage diversity and broad representation of the sector at the board with academic and supply chain representation being essential.

Stakeholder Panel

The establishment of an independent Stakeholder Engagement Panel is required in the draft Articles of Association. The panel will provide a mechanism for wide input from the consortium and membership to the operation of the Company and, while the Board of Directors will not be bound by any recommendations the Panel makes, they will be compelled to take notice. Once established the Company will need to develop detailed Terms of Reference.

SAIC Independent Scientific Panel

The establishment of a SAIC Independent Scientific Panel (SISP) is required in the draft Articles of Association and is expected to replicate previous arrangements. SISP previously operated as an international group of eminent scientists who help to ensure that research is world-leading, in line with the Scottish Government, HIE and SFC’s ambitions for Scotland to remain globally competitive, attractive, and respected. SISP members will provide vital independent, science-led expertise that allows the Company to deliver its purpose. (A slimmed down SISP functioning as a Project Funding Panel is currently in place as a cost saving measure.)

SAIC Consortium

The SAIC Consortium is a collaborative body of over 350 businesses and organisations, from SMEs to large multinationals and from cutting-edge new research institutions to Scotland’s oldest universities. SAIC’s database of consortium members is the largest collection of up-to-date contacts and intelligence on aquaculture organisations across the UK and holds considerable value to its custodians as a means to support collaboration and ‘project making’ as well as share and develop learning.

The SAIC Consortium allows academics and industry professionals to interact, with a guiding hand from SAIC, to generate collaboration opportunities. Consortium members benefit from engagement with SAIC regarding new funding opportunities and sector news. SAIC connects Consortium members where there is potential for future collaboration and uses those connections to build and strengthen collaborative research consortia, bringing together a wide range of project partners to submit successful funding applications to other funders (e.g. SIF, BBSRC, NERC) to leverage third-party funding. This creates a return on investment for funders, driving further applied research into, and out of, Scotland’s research base and fulfilling industry demand for innovative solutions.

6.3 Benefits Realisation

SG will ensure that the benefits described in the Business Case are delivered through a clear framework of KPIs embedded within the grant agreement. Benefits realisation will be monitored through regular reporting to SG and CES, with quarterly reports and annual summaries used to assess performance against strategic objectives.

A detailed benefits framework is considered in the CES Business Case, this section summarises the key roles and responsibilities that will ensure transparent and sustained realisation of benefits from the investment. Benefits realisation will be supported by structured quarterly reporting to Scottish Government and CES, with annual summaries used to assess whether activity remains on track to deliver the strategic objectives. This includes monitoring against KPIs.

This approach provides a transparent evidence-based method for demonstrating impact, ensuring value for money and maintaining funder confidence.

The roles and responsibilities are clearly defined below:

• Senior Responsible Owner (SRO) Owns all benefits and is accountable to CES for their realisation. Current Stage Owner: Marine Directorate
• Benefit Owner Represents the relevant business area, responsible for measuring benefits and managing the activities required to ensure those benefits are realised. Current Stage Owner: SAIC and SG
• Project Manager / Project Support Officer Reviews Benefit Profiles and maintains the Benefits Register. Reports to their respective Sub‑programme Boards; annual reporting is undertaken by the Head of Aquaculture for CES. Current Stage Owner: SG
• Project Leads Identify and profile benefits and ensure benefits are delivered through the proposed solution. Current Stage Owner: SG / SAIC

This structure provides clear accountability and oversight for achieving the scheme’s intended outcomes.

6.4 Risk Management

Marine Directorate will develop and maintain a risk register to identify, assess, monitor and manage risks that could affect delivery. The risk register will be informed by formal quarterly and annual reporting by SAIC alongside ongoing informal engagements and feedback from the sector.

Mitigations will be assigned, monitored and adjusted as needed to keep the register accurate.

Risk escalation will depend on severity and available mitigations:

• Strategic risks will be reported to Marine Directorate senior leadership and the CES Audit and Risk Committee and will subsequently be escalated to the CES Board as part of the quarterly committee cycle.
• SG will escalate risks to CES where newly identified risks, proposed mitigations, or associated scoring indicate a material impact on delivery or contractual compliance.
• SAIC will escalate risks to SG when they cannot be managed internally or where outstanding issues risk affecting delivery of the Grant Agreement or impacting the organisation. SG will then escalate matters to CES where necessary.

If a risk occurs, SG will ensure that actions will follow the risk management plan. This section is fully considered in the CES Business Case.

6.5 Contract management

Project assurance provides independent scrutiny throughout delivery to confirm that strategic objectives remain achievable and that the project is progressing as intended. This assurance strengthens delivery confidence and helps ensure that expected outcomes and benefits can realistically be achieved.

Grant funding will be managed by the SG Marine Directorate aquaculture team informed by formal quarterly and annual reporting by SAIC alongside ongoing informal engagements and feedback from the sector. Ongoing financial oversight, including annual reviews of SAIC’s management accounts, will form part of routine scrutiny processes conducted by both SG and CES.

It is imperative that work programmes and priorities are shaped by a long-term view of the challenges and opportunities before the Scottish sector and reflect the needs and aspirations of funders and Government as well as addressing shorter challenges faced by producers.

SAIC will update SG in a quarterly basis and will produce an annual report on progress. The report will be used to evaluate options on continuation of funding.

6.6 Post-project evaluation

This section is fully considered in the CES Business Case.

Progress against agreed metrics will be continuously supported by quarterly reporting and annual review. Approaching the end of the five years of funding, project evaluation will be undertaken to assess whether the project has achieved the outputs, outcomes, strategic objectives and value for money set out in the in the business case.

A new business case will be developed to decide on funding options for the continuation of SAIC. Different options will be assessed once more to decide on the future of the funding arrangement with the company.

6.7 Contingency plans

Preferred Case: SAIC be established as an independent body

SG has developed contingency arrangements should the preferred option encounter material delivery, governance or financial challenges. The contingency plan will be activated if any of the following occur:

• Failure to meet agreed KPIs after being unable to mitigate a flagged risk.
• Material financial mismanagement or audit qualifications
• Breach of subsidy control or governance requirements
• Inability to continue operations

Fallback options

• Underperformance - The Scottish Government will issue informal guidance, followed by an improvement notice if needed. Funding may be suspended, and SAIC will be required to produce a recovery plan.
• Governance Failure - The Scottish Government will support the Board through advice or training and may seek replacement of Board members. Interim management support will be arranged if necessary.
• Financial Failure -The Scottish Government may suspend or terminate the grant and will consider alternative options for delivery.
• Full Organisational Failure - The Scottish Government may terminate the grant, consider clawback, explore alternative delivery mechanisms, and support SAIC to close in a managed manner.

SG will ensure appropriate protection of public funds including:

• All funding agreements include clawback clauses
• Assets purchased with public funds revert to SG and CES.
• Project IP protected for public use

High level assessment of achievability.

Subject to the agreement of funding the preferred option is seen as highly achievable with wide support from the sector, the SAIC team and public sector partners. The timetable for implementation is however relatively tight with a number of processes needing completion before funding can be formally committed.

Recommended way forward

That a new company, SAIC, be established and funded by CES via SG. Following a period of stakeholder engagement, research and an options analysis, the Cabinet Secretary Rural Affairs, Land Reform and Islands has approved a proposal to constitute a new independent entity as a Company Limited by Guarantee, to be funded via grant managed by SG with funding provided by CES.

This company will deliver agreed KPIs to meet the overall strategic aims set out in the grant agreement, ensuring continuity of innovation support from April 2026 and sustaining SAIC’s existing strengths in project making, knowledge exchange sector coordination and research delivery. The recommended approach will:

• Maintain innovation support for the aquaculture sector
• Provide a stable governance and financial structure independent of any single host institution
• Ensure alignment with SG and CES priorities through clear grant funded outcomes
• Retain and utilise the expertise of the existing SAIC team to minimise operational disruption
• And enable a more inclusive, sector-wide model with strong input from industry, academia and stakeholders.

Taken together, this represents the most credible, deliverable and sustainable option for ensuring long-term innovation capability within Scottish aquaculture. This approach addresses the strategic need for coordinated applied research, collaboration and knowledge exchange, and supporting delivery of Scotland’s wider aquaculture, Blue Economy and climate resilience ambitions.