1. 11/11/2018 6:37 PM
Government Pay-for-Success Funding Arrangements: Risks & Rewards for Human Service Organizations (HSOs)
Lawrence L. Martin, Ph.D., MSW, MBA
Professor of Public Affairs
University of Central Florida (Orlando)
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

2. Overview Pay-for-success and performance-based contracting (PBC)
11/11/2018 6:37 PM
Overview
Pay-for-success and performance-based contracting (PBC)
Two approaches to PBC
- Public management approach
- Evaluation approach
Risks & rewards for human service organizations (HSOs)
Transforming federal grants into PBC
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

3. Pay-for-Success Pay for results Results based funding/financing
11/11/2018 6:37 PM
Pay-for-Success
Pay for results
Results based funding/financing
Outcome funding
“Social Impact Bonds” (*)
Others (compensation is related to performance)
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

4. Performance-Based Contracting (PBC)
11/11/2018 6:37 PM
Performance-Based Contracting (PBC)
If government funding is involved and if compensation is tied to performance then it is PBC
Pay-for-success is PBC
Difference between grants & contracts
- Grants are assistance
- Contracts are buyer/seller relations
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

5. Two Approaches to PBC Public Management Approach Evaluation
11/11/2018 6:37 PM
Two Approaches to PBC
Public Management
Approach
Evaluation
Type of Service
All
Prevention Type
Parties
Gov & HSO
Gov, HSO , Investor, Evaluator, (Intermediary)
Financing
Ex Anti HSO
Ex Anti Investor (*)
Funding
ExPost Gov to HSO
ExPost Gov to Investor
Value Base
Efficient, Quality & Effective Service Delivery
Search for Effectiveness
Performance Measures
Output, Quality, Outcome
Outcome
Standard of Performance
Achievement of Output,
Quality, Outcome
Documentation of Cause & Effect Relationship
Government Procurement
Conforms
Does Not Conform
HSO Financial Risk
Moderate - High
Low (*)
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

6. Two Approaches to PBC Public Management Approach
11/11/2018 6:37 PM
Two Approaches to PBC
Public Management Approach
- New Public Management/GPRA
& GASB SEA reporting
- Tying compensation to performance
Evaluation Approach
- Program evaluation & EBP
- Tying compensation to outcomes
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

7. Public Management Approach to PBC
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Public Management Approach to PBC
Performance
Measure
Type of
Compensation
(% of Fee)
Determination of Need
Process 10
Vocational Preparation
Job Placement
Output
Job Training
Job Retention 15
Job Stabilization
Quality/Outcome 20
Case Closed
Outcome 25
Service: State of Oklahoma Supportive Employment
(Job Training & Placement Services)
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

8. Evaluation Approach to PBC (Utah High Quality Preschool Program
11/11/2018 6:37 PM
Evaluation Approach to PBC (Utah High Quality Preschool Program
Type of Service
Prevention (Preschool)
Parties
Gov = State of Utah
Contractors: HSOs & School Districts
Financing
Goldman Sacks & Pritzker Family Foundation
Funding
State of Utah, United Way of Salt Lake
Outcome Performance Standard
(for full payment)
90% of children will avoid special education services later
Independent Outside Evaluator
Utah State University
Government Procurement
???????????
HSO Financial Risk
Low
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

9. Risks & Rewards for HSOs
11/11/2018 6:37 PM
Risks & Rewards for HSOs
Public Management Approach:
- Best suited to the ongoing delivery of
established human services utilizing
established service delivery methods.
- Assumption: HSOs have good service utilization,
performance and cost data.
- Audit exposure: When compensation is tied to
performance, the performance is auditable.
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

10. Risks & Rewards for HSOs
11/11/2018 6:37 PM
Risks & Rewards for HSOs
Evaluation Approach:
- Best suited for research and development (R&D)
type activities involving new interventions,
programs or service delivery methods, and
where existing interventions, programs or service
delivery methods are being applied to different
target groups or in different settings.
- More complex, more actors, incompatible with
government procurement regulations.
- Separation of compensation from performance?
© 2007 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

11. Transforming Federal Grants into PBC?
Title 2 –Grants and Agreements. Part
200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for
Federal Awards. (Short Name = “Uniform
Guidance”).

12. Turning Federal Grants into PBC?
The “Uniform Guidance” calls for:
- inclusion of outcome performance
measures in all federal grants.
- outcome performance measures may
reflect the preferences of the fed gov.
- Financial data must be related to
performance (?????)
- Fixed amount awards may be used
(compensation is tied to performance)

13. Transforming Federal Grants into PBC?
The GAO and the OMB said 11 years ago that: the lessons learned from performance-based contracting are going to be used to restructure the federal grant system.
Government Accountability Office (GAO) (2006). Grants management: Enhancing performance accountability provisions could lead to better results. GAO Washington, DC: Author.