Performance Contracting in the Public Sector & the Real World

Session Description: Generally when contracting for outsource services, the goal is to get the best service at the lowest price.  In the private sector the past performance of a vendor can play a much bigger role in awarding a new contract than it typically does in the public sector.  The awarding of contracts in the public sector is often constrained by statutory and local requirements.

With performance contracting, you pay the contractor based on their results not their method.  It is a contracting method in which you specify what you want those results to be. The contract can include incentives and/or penalties to the contractor to achieve the desired outcomes.  It should have clearly specified performance indicators expressed as Key Performance Indicators (KPIs) which need to be specific, measureable and achievable.

Performance-based contracts can lead to an improved level of service especially if there is an incentive for the contractor.  There can also be a reduction in total cost. By using a performance contract you have an opportunity to better define the level of service you are looking for.

Discover which outsourced services are right for performance contracting. Learn how to write a performance contract request for proposal, and how much baseline information to include. In the end the contract can be a win-win for you and the contractor.