10. Results-Driven Contracting

In 2019, the Arizona Department of Child Safety (DCS) partnered with the Harvard Kennedy School Government Performance Lab to improve the quality of in-home preservation services. At the time, nearly one in five families receiving supportive in-home preservation services were re-reported for maltreatment, resulting in the removal of a child from that home. Through active contract management, implementation of uniform performance measures for providers, and establishment of a unit to oversee child and family service contracts, DCS was able to reduce the number of families re-reported by 40% and the number of child removals by 50%.

In 2015, the Colorado General Assembly passed HB 15-1317, which authorized the Governor’s Office of State Planning and Budgeting (OSPB) to enter into Pay for Success (PFS) agreements. Colorado continues its Pay for Success programs to improve outcomes for youth at risk of out-of-home placements. These contracts seek to achieve equitable outcomes by targeting youth “involved in the child welfare system or juvenile justice system”, which are systems that disproportionately impact low-income populations and youth of color. Evaluation metrics include attendance rates, reductions in suspensions, and improvement in credit accumulation; and research by The Brookings Institute and other entities show strong correlation between high school education attainment and upward economic mobility.

Three programs were implemented with payments dependent on the achievement of a set of preselected outcomes. Per the annual report: “As of May 2021, both the Fostering Opportunities and Multi-Systematic Therapy (MST) projects have hit their desired implementation benchmarks. In March 2021, the independent evaluator certified that the MST project had once again exceeded its desired implementation metrics, resulting in an additional success payment to investors of $305,190, the maximum success payment possible under the contract. In April 2021, the evaluator certified that the Fostering Opportunity project had reached a success level three (out of four levels), yielding a payment to investors of $427,105. The Denver Runaway Project was terminated in September 2020 under the contract guidelines due to low take-up of services.”

Connecticut’s Department of Children and Families, in partnership with the Harvard Kennedy School’s Government Performance Lab, implemented an Enhanced Service Coordination project in 2019. One part of the state’s 2020-2024 Child and Family Services Plan, it seeks to improve the process of matching clients to services across the state. The innovations include real-time use of data to inform organizational processes and procurement as well as active contract management strategies to further improve service delivery.

The Florida Department of Children and Families partnered with the Harvard Kennedy School Government Performance Lab to improve child welfare and behavioral health service delivery in Florida’s Suncoast region, which has four million children receiving child protection services. The department adopted active contract management practices to enhance coordination among providers and allowed contracted providers to track client-level data for a prioritized set of six performance metrics. These innovations led to better service delivery, including increasing the share of clients completing a timely needs assessment by 28% and doubling the share of caretakers beginning substance use treatment within 30 days of referral.

The Illinois Department of Juvenile Justice and Department of Children and Family Services streamlined the support process and expanded clinical and social services for youth who are dually involved in the child welfare and criminal justice systems. The project used a performance-based contract, active contract management, and other tools to focus on streamlining case management, improving coordination between the foster care and juvenile justice systems, and augmenting services by using evidence-based interventions. Early results include reducing the reporting time for the state to share juvenile justice occurrences with child welfare agencies from 90 days to fewer than three days.

The state utilizes a Major Project Governance Policy to provide all state agencies with guidance and resources to actively manage contracts and utilize data and contract procurement and management resources. Contracted projects meeting specific criteria must complete certain agency work products during the project process and coordinate with the Major Project Governance (MPG) Office. Agencies complete a baseline for key performance indicators (KPIs) and measures of success. These KPIs and measures are tracked post-implementation to determine if the project goals and benefits are achieved. The post-implementation measures are collected on a quarterly basis via the Value Reporting Portal.

Since 2013, DOC has set performance targets for its community corrections program through performance-based contracts. Providers who meet recidivism prevention goals receive a 1% increase in their rate, while providers who fail to meet targets for two consecutive years can have their contracts terminated. Following the introduction of these performance goals, the program’s recidivism rate dropped by 11.3% in 2014, another 16% in 2015, and an additional 11% in 2016. In 2018, the Commonwealth Foundation’s report on criminal justice reform in Pennsylvania recommended expanding the program to other areas based on these results.

DOC is in receipt of a FY 21 “Pay for Success” grant from the U.S. Department of Justice Bureau of Justice Assistance. Using federal funds, DOC will pilot a model to provide housing services to hard-to-serve and vulnerable populations after release. Vendors will earn a significant portion of funds by meeting DOC defined outcomes, such as recidivism reduction and placement in permanent housing.

In 2022, the Department of Labor and Industry launched a Results Driven Contracting project with the Harvard Kennedy School’s Government Performance Lab. The project included the completion of a workforce grantee engagement survey aimed at identifying opportunities for improvement in the competitive grant process and the implementation of a grant life-cycle roadmap for use during monthly grantee meetings. The survey was sent to workforce grantees and grant applicants from the previous five years and yielded a 45% response rate. The survey covered awareness of grant opportunities, applying for grant opportunities, and the post-award experience with a focus on grant equity principles. As a result of the survey data, L&I has implemented some key changes:  L&I now posts a quarterly workforce grant forecast; the department instituted: a standardized process to review invoicing procedures with grant recipients at the initial grantee meeting and added staff to expedite invoice processing; and the department has developed a new budgeting and invoicing spreadsheet.

Since 2015, Rhode Island’s Department of Children, Youth, and Families has worked to reform and restructure the Department’s procurement process. As part of this initiative, the Department has required providers to meet outcome goals rather than output metrics across 116 results-driven contracts amounting to $90 million. As a result, the department has reduced the number of children in group care by more than 26% since 2015, expanded foster care resources for the most challenging adolescents by 55%, and doubled the capacity of high-quality family visitation and reunification services.

Also in 2015, the Department of Labor and Training launched Real Jobs Rhode Island, an innovative $14 million workforce program that used performance-based metrics and active contract management. As a result, the State reconfigured the way it manages and evaluates its job training programs to capture meaningful, long-term employment outcomes. It also created a Strategic Coaching Procurement Playbook, which includes specific strategies and sample language for using active contract management to achieve better results.

Rhode Island Works, administered by the Department of Human Services, also used performance payments and active contract management to improve its job search services, which ranked at the bottom nationally on the federal measure of work participation rate in 2015. To improve the program, the department partnered with the Harvard Kennedy School Government Performance Lab to incorporate performance-based payments for self-sufficiency outcomes and deploy active contract management. As a result, the federal participation rate improved by one-third within the first six months after these reforms were launched.

A 2021 state law established a trust fund in the State Treasury for the purpose of making Pay for Success contracts. Each agency entering into a Pay for Success contract must provide funding into the trust to cover 100% of the potential success payment. Upon written authorization by the state agency head whose state agency has entered a Pay for Success contract, the state treasurer will make payments from the trust fund.

From 2016-2020, South Carolina carried out a Pay for Success project to expand home visiting services to 4,000 additional low-income mothers and their children. South Carolina’s Department of Health and Human Services (SCDHHS) used the contract to deliver preventive services to first-time mothers in the state’s Medicaid program with the goal of improving the health outcomes of mothers and their babies. As part of the project agreement, South Carolina will make up to $7.5 million in success payments to sustain Nurse-Family Partnership’s services only if independent evaluators find positive results. In order to incentivize implementing agencies to enroll low-income mothers who may have more risk factors, project partners made enrollment from low-income zip codes a payable outcome. Additional payable outcomes for the project include reductions in child injury rates, preterm births, and rapid repeat pregnancies.

In 2016, the Tennessee Department of Children’s Services introduced a performance-based contracting model that includes performance bands. Agencies are placed into one of three bands: high performance, mid-range (or average) performance, or lower performance. Providers are then paid based on their performance on specific metrics resulting in a performance pay system with standardized outcomes, daily rates for contracts, metric definitions, and measurement methodology. As part of this initiative, the agency distributes monthly performance reports to providers.

Texas provides information regarding the process for Evidence Based Grantmaking and Outcomes Based Payments at Texas Workforce Commission Evidence Based Grantmaking | Texas Workforce Commission. Applicants and grantees are provided with this information during the solicitation phase of included requests for application (RFAs).

The Texas Workforce Commission reviews its grantee performance monthly or quarterly. Per deobligation policy in state statute, the Commission has authority to terminate contracts for poor performing grantees. Funds deobligated from grantees are typically first available to transfer to other grantees within the program before they are pulled back to agency wide reserves. It states:

“[Texas Workforce Commission] may deobligate funds if performance and/or expenditures are not meeting a detailed program plan and implementation schedule; and/or expenditure projections at the following intervals: twenty-five percent (25%) of the grant period; fifty percent (50%) of the grant period; and seventy-five percent (75%) of the grant period.”

The State of Utah Division of Purchasing has created the new Office of Contract Management Support (OCMS) in order to improve the overall efficacy of contracts and contract management throughout the State. OCMS is being implemented with a focus on creating and continuing partnership relations and being a value-add resource. It aims to accomplish this through multiple focus areas; creation of contract management standards, proactive engagement and support to agencies, trend analysis, vendor scoring.

OCMS has created a new system for contract management that acts as a contract repository and also tracks survey responses from contract managers to show scores and trends over the life of the contract. This tool also allows for the team to compare vendors with multiple contracts across one or multiple departments to look for areas of improvement and consolidation to reduce administrative burden. By adding this tool to the existing solicitation tracking system, the Division created a way to better track the full procurement life cycle to provide better overall support to Executive Branch Agencies and key stakeholders.    

Procurement for the Utah Department of Health and Human Services (DHHS) is outcomes-focused based on Results Based Accountability.  DHHS requires all contracts and agreements to include measurable outcomes, an explanation of how the outcomes will be measured, and an explanation of how the outcomes will be reported to DHHS. Outcomes must be established following Results Based Accountability principles. The department gathers a variety of performance data and frequently communicates with providers regarding outcomes.