The design and management of performance-based contracts for public welfare services

doi:10.1017/CBO9780511488511.011

11 - The design and management of performance-based contracts for public welfare services

Published online by Cambridge University Press: 22 September 2009

Youseok Choi and

Carolyn J. Heinrich

Edited by

George A. Boyne ,

Kenneth J. Meier ,

Laurence J. O'Toole, Jr. and

Richard M. Walker

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Youseok Choi: Affiliation:
Doctoral student in social welfare University of Wisconsin-Madison
Carolyn J. Heinrich: Affiliation:
Associate Professor at the LaFollette School of Public Affairs and Associate Director of the Institute for Research on Poverty University of Wisconsin-Madison
George A. Boyne: Affiliation:
Cardiff University
Kenneth J. Meier: Affiliation:
Texas A & M University
Laurence J. O'Toole, Jr.: Affiliation:
University of Georgia
Richard M. Walker: Affiliation:
The University of Hong Kong

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Summary

Introduction

In the United States, the Wisconsin Works (W-2) programme is widely regarded as a pioneer in public welfare reform (Mead 2004). Beginning in 1997, Wisconsin made major changes in the administrative structures for the delivery of welfare services, ending the county government monopoly on public assistance administration and inviting private sector agencies to compete for contracts to manage local level programmes. Performance-based contracting was also introduced to motivate and monitor the performance of W-2 agencies by setting performance standards (and target levels) in advance and making payment and performance bonuses contingent on the achievement of performance goals.

Wisconsin is just one of many states that has increased contracting for public welfare services in the Temporary Assistance for Needy Families (TANF) programme. The US Government Accounting Office (GAO 2002) reported extensive contracting out for TANF services delivery in every state except one, with most funds (88 per cent) in state-level contracts (and close to three-fourths of these contracts with non-profit providers). The percentage of total TANF funds in contracts between states and for-profit providers ranged from 0–100 per cent in 2001; in addition, the majority of state funds were in traditional cost-reimbursement contracts (about 60 per cent); only about one-fifth of contracts included incentives to improve performance.

Designing performance-based contracts that align the interests of public and private providers with policy goals and effectively enforcing contract provisions are challenging tasks.

Type: Chapter
Information: Public Service Performance
Perspectives on Measurement and Management
, pp. 189 - 211

DOI: https://doi.org/10.1017/CBO9780511488511.011 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2006

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