Success factors in contracting for outcomesFive critical factors so you can hit the ground running |
This paper seeks to assist UK public sector departmental and agency heads address contracting issues given the Coalition Government’s announced drive to deliver £81 billion in budget and program savings in the wake of the ongoing fiscal crisis.
However the critical success factors identified are equally relevant to Australian public sector leaders planning to introduce more contestability into contracting services, and seeking more innovation in the way public services are delivered, including the use of outcomes-based performance contracting. For while the principles – and the basics - of contracting for outcomes models are widely known, there is less understanding across all areas of government on the technical challenges in putting the model to optimal use and what is required to create a transparent, widely understood, effective and competitive marketplace for service providers.
The paper addresses these points and takes a wider look at this developing market for public service delivery. Using data and feedback provided by government departments and private and voluntary sector service providers, it outlines five key areas where improved insight is needed to ensure markets function effectively in future. From a supply-side it also looks at financing requirements for providers seeking to enter these markets, and describes challenges and opportunities as contracting for outcomes is rolled out across multiple service areas.
Contents include:
Executive summary
Context: the challenge in creating a functional, transparent, widely understood marketplace
Contract fundamentals: responsive pricing, contract management and external distortions
Managing unintended consequences: flexible payment schemes and protecting against perverse incentives
Overlaps in multiple programs: multiple service contracts and single client models
Providers and lenders: new financial product requirements
Payment and performance: appropriate pricing structures
Conclusion.
Success factors in contracting for outcomes
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