2018 State Standard of Excellence

14. Contracting for Outcomes

Did the state or any of its agencies enter into performance-based contracts and/or use active contract management (frequent use of data and regular communication with providers to monitor implementation and progress) to improve outcomes for publicly funded programs?

Why is this important?
These contracting techniques allow state governments to get better results and value for each taxpayer dollar.

Leading Example

Rhode Island Outline


Single agency

Since 2015, Rhode Island’s Department of Children, Youth, and Families has worked to reform and restructure the department’s procurement processes in four areas: improving service delivery through strategic planning, embedding results-driven procurement in new contracts, improving performance through active contract management practices, and supporting results-driven contracting practices through technical resources, tools, and processes for staff. As part of this initiative, the department executed $90 million in results-driven contracts that require providers to meet outcome goals rather than output metrics. This has led to a reduction in the number of children in group care by nearly 20%, reduced the number of children in state custody due to improved preventative services, expanded services available to families and children, and made improvements in the department’s procurement process.

Promising Examples


Single agency

In 2014, Massachusetts launched the Massachusetts Chronic Homelessness Pay for Success Initiative to provide permanent supportive housing to 500–800 individuals experiencing chronic homelessness. As part of the five-year, $3.5 million project, the state will make payments based on stable housing for at least one year for program clients. As of March 2018, the Pay for Success program has housed 668 tenants. The project partners hold monthly operational monitoring meetings to review performance and quarterly oversight meetings with Massachusetts Department of Housing and Community Development. Massachusetts has also launched a Pay for Success contract, Pathways to Economic Advancement, to improve employment outcomes for immigrants.


Single agency

In 2016, the Tennessee Department of Children’s Services introduced a new performance-based contracting model, which standardized outcomes and the payments. Providers are now paid based on their performance on specific metrics. As a result of this performance pay system, the agency has standardized outcomes, metric definitions, and measurement methodology. As part of this initiative, the agency distributes monthly performance reports to providers.

Various States

Four states (California, Connecticut, Michigan, and South Carolina) are currently implementing Pay for Success initiatives but have yet to report outcomes or results. For more information about the projects, their partners, and outcomes, please visit the Nonprofit Finance Fund or Social Finance.