Study on the Benefits of using Social Outcome Contracting in the Provision of Social Services and Interventions

Social Outcomes Contracting (SOC) refers to procurement mechanisms based on outcomes rather than outputs. For example, governments can either choose to fund trainings for the unemployed (output) or issue payments to service providers only if the unemployed find jobs and maintain them for a certain time (outcome). Some types of SOC models involve private sector investors who provide initial funding for a social service and receive a refund plus interest from the government if outcomes agreed upon in advance are successfully achieved. These procurement mechanisms give governments more flexibility to experiment with new social interventions because governments do not shoulder the cost if interventions fail. They also bring together multiple stakeholders from the private, public and third sectors, providing ground for collaboration and new ideas in areas like unemployment, care, homelessness, recidivism, and others.

Nevertheless, SOC schemes are still novel and exist primarily in the UK and the U.S. Other countries in Europe lack knowledge about the advantages and disadvantages of SOC funding. Various scholars raise ethical concerns about the involvement of the private sector in social service provision or question the ability to objectively evaluate whether the agreed outcomes have been achieved. To fill these knowledge gaps, DG EMPL has contracted PPMI and our partners POLIMI to carry out a global comparative assessment regarding SOC. We will map and review the outcome measurement methods used in select SOC schemes, assess their effectiveness, added value and costs as well as compare them with traditional financing models. The study will provide timely recommendations for EU governments that consider funding social services through social outcome contracts.

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