The article by Louise Savell & Mara Airoldi discusses the role of outcomes-based contracts, specifically impact bonds, in responding to the COVID-19 pandemic and building more resilient strategies to tackle social problems. The authors reflect on insights gathered from the Emergency Response and Government Outcomes (ERGO) webinars organized by the Government Outcomes (GO) Lab at the University of Oxford’s Blavatnik School of Government.
Here are the key points highlighted in the article:
1. Flexibility and Adaptability: Outcomes-based contracts have shown their value in adapting to changed circumstances during the pandemic. These contracts specify desired outcomes without prescribing specific methods, allowing projects to adjust and find innovative ways to deliver services. For example, service providers shifted to remote service delivery, resulting in unexpected positive outcomes such as increased accessibility and engagement.
2. Remote Data Collection: COVID-19 restrictions have posed challenges for data collection and outcomes verification. However, efforts have been made to transition to online and telephone-based data collection methods. Contracts based on government data sets and routine data collection have shown more resilience compared to those requiring bespoke data collection. Governments are also investing in data systems and integration to monitor the impact of spending during the crisis.
3. Contractual Amendments: Parties involved in outcomes-based contracts have prioritized the continuation of services during the pandemic, even if some adaptations were necessary. Contractual amendments have included extensions, advances on outcomes payments, revaluation of payments, and preparations for service-based payments if outcomes delivery or evaluation becomes constrained.
4. Stakeholder Relationships and Governance: Strong relationships and active governance have been crucial for the rapid adaptation of services, outcomes evaluation, and contracts. The relational nature of outcomes contracts highlights the importance of capturing this aspect in legal documents. Force majeure clauses designed for service-based contracts were insufficient to support adaptation during the crisis.
The article suggests three principles from outcomes-based contracts that can strengthen COVID-19 recovery efforts:
1. Aligning cross-sector partnerships around shared definitions of success and fostering accountability through strong relationships and effective governance.
2. Using real-time data to measure progress and make informed decisions.
3. Issuing flexible contracts that enable service providers to respond to uncertainty and changing needs.
Furthermore, outcomes-based contracts, such as impact bonds, can help governments focus spending on short-term priorities while ensuring investment in critical long-term services. These contracts could also be used to tie payments to demonstrable results, ensuring value for public spending.
Overall, the article emphasizes the importance of trust, collaboration, and adaptable contract structures in navigating the uncertainties and challenges posed by the COVID-19 pandemic and other crises.