Outcomes-based contracts (OBCs) can be valuable tools for governments to link payments to desired improvements in service delivery. Defined as any contract structure in which payment is wholly or partially based on the achievement of predefined outcomes, OBCs are part of a broader family of performance based procurement strategies. Though they present various benefits to governments, including incentivizing improved performance and facilitating greater use of data in decision-making, OBCs also present various challenges and risks to governments and the service providers with whom they contract. This brief discusses the benefits and challenges from the OBC field, collected through interviews with practitioners and researchers, and provides practical recommendations for government practitioners interested in OBCs.
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