Social Outcomes Contracts (SOCs) refer to procurement mechanisms based on outcomes rather than outputs. For example, governments can either choose to fund trainings for the unemployed (output) or issue payments to service providers only if the unemployed find jobs and maintain them for a certain time (outcome). SOCs give governments more flexibility to experiment with new social interventions because governments do not shoulder the cost if interventions fail. Nevertheless, various scholars raise ethical concerns about the involvement of the private sector in social service provision or question the ability to objectively evaluate whether the agreed outcomes have been achieved. To fill these knowledge gaps, DG EMPL has contracted PPMI and our partners POLIMI to carry out a global comparative assessment regarding SOCs and traditional ways of financing social services.
To carry out the assessment, PPMI mapped all the SOCs in the world for which evaluations were available, ultimately selecting 15 diverse case studies for in-depth analysis. We then reviewed the outcome measurement methods used in select SOC schemes, performed interviews to assess their effectiveness and added value, and engaged in cost-effectiveness analysis to assess their efficiency as well as compare them with traditional financing models.
The study provided recommendations for EU governments that consider funding social services through social outcome contracts, including the target groups for which these procurement mechanisms are most effective, how to design the contracts and robustly measure the outcomes achieved, and when to resort to traditional procurement mechanisms. The results will also be taken into account in the context of the programmes financed or co-financed by the European Commission.