How do public contracts deliver wellbeing?
In the wake of the COVID-19 crisis, public contracts have made news headlines, making it all too clear that we must use all means necessary to solve the challenges at hand. We spend tens of billions of euros every year in public contracts, therefore we need to make sure those contracts deliver the desired outcomes, such as improving the lives of families with children.
In the traditional public contracts awarding process, the relevant public sector organisations prepare a detailed description of the service to be delivered to meet a specific need. The service provider is selected after competitive tendering, and steps are taken during the contract period to make sure the service meets the description provided. But does this process provide us with information on the actual outcomes?
How can the contracting organisation be sure it has access to the best expertise to achieve the desired outcome? Can contracting provide the means for responding to the needs of the changing operating environment? Is there a way to make better use of the expertise available in creating solutions that can make a difference? Are we providing opportunities and incentives for the private and third sector to show what they can do?
If we want to make sure the changes will actually happen, we need to make the contracts process all about outcomes.
What, then, is different if we buy outcomes instead of outputs? How does outcomes contracting enable us to more effectively tackle contemporary challenges?
In the outcomes contracting process, the contracting organisation prepares a description of a successful outcome instead of describing the service. An example of such an outcome would be the daily life of a family with children once the desired objectives have been achieved. Service providers are allowed to plan a service package with which the objectives can be achieved. During the contract period, the contracting entity and the service providers will jointly monitor the achievement of the objective and make any changes as necessary.
In the outcomes contracting process, the contractor and the service providers are required to make their expertise available to each other, and to share responsibility for a successful outcome. This process also allows experimenting, using the latest information, and responding to changes in the operating environment. Sometimes what was thought to be a first-class service may fail to deliver the expected outcomes. The Children SIB project currently under way has taught us that the flexibility, timing and duration of assistance provided to families with children are crucial. Knowledge-based management is essential.
An individual service is unlikely to deliver the desired changes. Outcomes contracting is forcing us to adopt new forms of cooperation. Service coordination between the service providers and the contracting organisation alike is necessary to meet the objective. The new, systemic solution required is one that crosses administrative branches and recognises the interdependencies involved. To overcome the crisis, we must focus on bringing all activities together to serve a common cause, such as providing a good life for families with children.
This is the time to change direction and set a new course for impactful public contracting. A national public contracts strategy will be published in the autumn. One of the strategic intents outlined in the draft is “Finland is a pioneer in knowledge-based management of public contracts and in creating impact”. A shared strategy provides contracting entities a strong foundation for changes. Assistance with implementation is available from the KEINO Competence Centre for Sustainable and Innovative Public Procurement, which is launching a development programme for outcomes contracting management. Application to this programme is open to contracting entities until 29 May. Assistance will also be available from the Centre of Expertise for Impact Investing for outcomes contracting and for making effective use of expertise in the private and third sector and, where necessary, private capital.
Centre of Expertise for Impact Investing