The COVID-19 crisis has created a unique opportunity for the federal, state, and local governments: to end a pandemic and to address long-standing injustices. The seemingly intractable economic, educational, and health disparities of today reflect centuries-old racial inequities. Social and economic mobility has declined, such that the average American no longer expects to experience greater prosperity than their parents. In much of the country, regional inequities amplify these challenges.
Through the American Rescue Plan Act (ARPA), states and localities are receiving $350 billion in relief funding. In some communities, these dollars will simply allow for the restoration of cuts in important services. In others, it will be possible to invest in new programs that address structural inequities and increase economic mobility. This funding creates an extraordinary opportunity. Investing funds based on the outcomes they deliver can help communities realize these opportunities.
Outcomes-based contracting is an effective, tested, results-based tool that both state and local governments can use to drive impact. Unfortunately, such contracting is often not a part of regular government business operations and contracting processes. Simply delivering services is challenging enough for governments often lacking staff capacity or information technology infrastructure. Data systems needed to track and report on results are often siloed across different programs and baked into legacy systems that do not meet contemporary needs for data sharing and integration. Regular performance-based routines for analyzing and improving results are not the norm. Even when there are improvements in the use of data to monitor outcomes, fundamental incentives do not change — payment is often tied to cost reimbursement rather than results — and therefore the outcomes for the communities served do not change. Incentivising state and local governments to invest funds based on outcomes can change the trajectory.