Contractual acrobatics: a configurational analysis of outcome specifications and payment in outcome-based contracts

Abstract

Outcome-based contracting (OBC) seeks to improve public services by paying for service outcomes rather than service activities. This article explores the link between how outcomes are contractually specified and how much is paid for their achievement. Using fuzzy-set Qualitative Comparative Analysis, we test a framework for assessing the strength of outcome specifications in 34 UK-based social impact bonds, a particular form of OBC. Results show that contract features which define intended participant cohorts and include deadweight estimation approaches help constrain suppliers’ ability to appropriate value and thus reduce the likelihood that public managers pay for social outcomes of questionable value.