Child Welfare Privatization Initiatives
Assessing Their Implications for the Child Welfare Field and for Federal Child Welfare Programs
Topical Paper #5
U.S. Department of Health and Human
Office of the Assistant Secretary for Planning and Evaluation (ASPE)
|This paper was prepared by Planning and Learning Technologies, Inc. in
partnership with The Urban Institute for the Office of the Assistant Secretary
for Planning and Evaluation, U.S. Department of Health and Human Services,
under contract HHSP233200600242U. The opinions expressed in this paper are
those of the authors and do not necessarily represent positions of the U.S.
Department of Health and Human Services.
This issue paper was written by Charlotte McCullough of McCullough and Associates, Nancy Pindus of The Urban Institute, and Elizabeth Lee of Planning and Learning Technologies, Inc. Paper review and comments were provided by Karl Ensign of Planning and Learning Technologies, Inc.
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Child welfare privatization is accomplished through contractual agreements between local or state public agencies and private providers. Contracts document an understanding about the service the contractor will offer, the results expected, and the cost. Developing effective contracts is a difficult task and the actual writing of the contract is the last step in a series of steps to procure services. Studies on child welfare privatization initiatives (GAO, 1997; Freundlich & Gerstenzang, 2003) have identified several shortcomings in service contracts reviewed, including a lack of clarity and detail about a range of direct services and activities or, the reverse, excessive detail about requirements that reduce the flexibility and creativity often expected from privatization initiatives.
This paper places current contracting issues in a historical context and describes the many important decisions that must be made carefully, and when possible inclusively, with the provider community during the procurement or contract renewal process. The paper provides examples of some of the decisions that must be made during pre-procurement planning to determine basic program components and describes some of the lessons learned about preparing solicitations, selecting bidders, and executing contracts.
An overarching theme of this and other papers in the series is partnership. When public agencies contract for services, they are seeking one or more partners to share the risks, rewards, and responsibilities of delivering services to children and families in the child welfare system. To the extent allowed by state procurement rules, a collaborative public-private planning process can ensure that consensus is reached on the broad goals and expectations of the procurement, paving the way for explicit, fairly negotiated, enforceable, and outcome-based contracts.
This is the fifth of six papers in a technical assistance series. The project was funded in 2006 by the Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services (DHHS, ASPE). The paper series is designed to provide information to state and local child welfare administrators who are considering or implementing privatization reforms. For the purpose of this paper series, privatization is defined as the contracting out of the case management function with the result that contractors make the day-to-day decisions regarding the child and familys case. Typically, such decisions are subject to public agency and court review and approval, either at periodic intervals or at key points during the case.
This paper builds on information already presented in other papers in this series and makes reference to the other papers throughout. These are available online as they are completed at http://aspe.hhs.gov/hsp/07/CWPI/.
This paper series incorporates research conducted under the Quality Improvement Center on the Privatization of Child Welfare Services (QIC PCW), funded in 2005 by the Childrens Bureau, U.S. Department of Health and Human Services. It also draws from the research on privatization in other, closely related social services. Additional information for this paper comes from the field experience and from telephone discussions with state and county child welfare administrators and private providers.
State and local governments have paid private, voluntary agencies to provide child welfare services since the early 1800s (Rosenthal, 2000). Today, most public child welfare agencies could not offer a full array of services without the private sector. For example, a report by the U.S. Department of Health and Human Services, based upon results of a survey of public child welfare agencies, found that 58 percent of all family preservation services, 42 percent of all residential treatment, and 52 percent of case management services for adoption are contracted out to private agencies (DHHS, 2001).
Until the mid-1990s, public child welfare agencies used noncompetitive, quasi-grant arrangements to purchase services from private, typically nonprofit, agencies. Since that time, practice, policy, and fiscal considerations have set the stage for the emergence of a variety of new types of contractual relationships, many of them competitive and performance-based. In contrast to earlier contracts in which private agencies simply agreed to serve a certain number of children or families in return for payment based upon a pre-determined rate, current contracts often include performance targets and fiscal incentives or disincentives tied to performance standards.
The concept of performance based contracting (PBC) was facilitated by the federal government in 1991 when the Office of Federal Procurement Policy in the Office of Management and Budget (the Office) issued a policy letter on service contracting that emphasized the use of performance requirements and quality standards in defining contract requirements, source selection, and quality assurance. In 1997, the requirement was incorporated into the Federal Acquisition Regulations. In 1998, the Office released a Guide to Best Practices for Performance Based Service Contracting, and in 2004 the Office replaced the 1998 guide with the Seven Steps to Performance Based Service Acquisition, which provides an overview of the contracting process and essential contract elements (FCS Group, 2005).
By the late 1990s, some states had mandated the use of performance based contracts for all purchased services, and many other states had initiated other contract reform efforts (FCS Group, 2005). Today, child welfare service contracts within the same state can differ from one jurisdiction to another in significant ways. In addition to targeting different families, requiring different services, establishing different performance expectations and using different payment methods, they can differ in the degree of competition for contract awards and the level of negotiation of final terms and conditions.
In addition to variability in the types of contracts used, there is also variability in the quality of contracts. Research on child welfare privatization initiatives has found that, in many cases, contracts do not always have clearly defined expectations regarding the services to be provided, the target population to be served, the expected results, and the means by which the services will be funded. For instance, a recent analysis of jurisdictions that had privatized one or more components of the child welfare system found that contracts were often extremely lengthy, unduly complicated, and overly focused on details that bore little relationship to the critical issues that needed to be addressed. In some cases, contractual expectations were ambiguous. The contracts combined vague service obligations, poorly defined outcomes and performance measures, and poorly specified roles and responsibilities of public and private agency workers. The result in many initiatives was that an inexperienced purchasing agent did not receive the expected services, which in turn, placed the provider agencies at some level of financial risk due to their poor performance (GAO, 1997; Freundlich & Gerstenzang, 2003).
The remainder of this paper describes how contracts are created and provides insights from public and private agency officials that have engaged in this work.
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The quality of the contract can depend, in part, upon how the public agency structures the planning process and reaches consensus on programmatic and fiscal issues. Either through a collaborative contract planning process or behind closed doors, public agencies must create a structure and assign responsibility for fleshing out the scope of work and establishing performance and outcome measures and payment arrangements. Solicitation documents and final contracts cannot be written until there is clarity about:
Research suggests that discussions between public and private agencies are important in building consensus about the goals of a new procurement and/or needed changes in existing contracts (Kahn & Kamerman, 1999; McCullough & Schmitt, 2003; Figgs & Ashlock, 2001). Furthermore, if an implicit or explicit goal of introducing a new contract is to foster a stronger public-private partnership, private agencies should help shape the terms and conditions under which they will be expected to operate.
While collaborative planning may be desirable, in reality, a states procurement rules may restrict this process. The choices for planning and executing contracts may also be affected by the need for competition either as directed by a states procurement policy or because a state or jurisdiction wants to reduce the number of providers delivering a service. If competitive bidding is required (or sought out) to meet design goals or mandates, state procurement rules and policies may make it difficult to ensure broad-based input and buy-in on model design, service delivery, and payment methods. In some states, administrators are allowed to hold meetings to discuss proposed contracts with private agencies only if prior notice was given to all eligible bidders and if the contracting officer is present to ensure that the dialogue does not violate procurement rules regarding fair competition.
In those instances when the public agency is not required to competitively procure services and the overall design does not require the public agency to limit the number of contracts awarded, private providers can be engaged in early and sustained dialogue essentially collaborating in the design of all elements that will ultimately be included in a contract. This is the model that Illinois used in developing its Performance Based Contracts (see textbox). Illinois learned from its experience in 1997 procuring foster care services that the best way to ensure a shared vision of success (and a shared approach to achieving it) was to engage the private provider community and other stakeholders, including the courts, prior to contract development and work out program and implementation issues together (McEwen, 2006).
In 1995, following a gubernatorial directive, the Illinois Department of Children and Family Services established the Child Welfare Advisory Committee (CWAC) to advise the Department on programmatic and budgetary matters related to providing or purchasing child welfare services. In 1997, a Foster Care Infrastructure Work Group comprised of nonprofit foster care provider agencies with Purchase of Service (POS) contracts was created to craft, propose and implement strategies for improving system performance (McEwen, 2006).
In 2007 the CWAC helped design and develop proposed performance outcome measures, fiscal incentives, and risk adjustment strategies for the states new performance based contracts for residential care, independent living, and transitional living programs.
In 2007, Illinois significantly expanded stakeholder involvement in planning for the expansion of performance based contracts for independent living, transitional living, and residential care. Workgroups held more than 75 meetings to work on the design during the first year of contract development. They performed the following tasks:
Rather than issuing a competitive Request for Proposal (RFP) for agencies to participate in the demonstration project, Illinois simply added contract addenda containing the new performance measures to existing residential and ILO/TLP contracts. Providers agreed to cooperate in all data collection, evaluation, and training efforts. The Project Steering Committee, the CWAC Subcommittees, and Workgroups continue to meet monthly to evaluate performance data. Modifications, if any are necessary, will be incorporated into state fiscal year 2008-2009 contracts.
When Philadelphia decided to adapt the Illinois performance based contracting (PBC) model, a similar collaborative planning process was developed. Between early 2002 and early 2003, a PBC Design Group which included the County child welfare agency, the provider agencies, the city law department, and outside experts, developed the basic PBC contract. The contract included the performance targets, requirements for care and services, a redesigned referral process, provisions regarding aftercare and reentry, and other matters. After PBC went live for the 27 largest provider agencies in March 2003, the Design Group continued as a Steering Group that meets monthly to discuss systemic barriers to permanency, refine the basic PBC performance measures and contract to accommodate unforeseen circumstances, and consider other issues affecting the foster care system (Hollingsworth and Roth, 2006).
In addition to making critical design decisions, public agencies must also decide on general terms of the solicitation such as determining eligible bidders, the number and types of contracts that will be awarded, the implementation process, and the duration of the contracts.(2)
Public agencies must decide who they want for potential partners. Will only nonprofit agencies be allowed to compete, or will public and for-profit companies be allowed and encouraged to bid as well? This decision may affect the way the solicitation is written and how the review process is conducted. For instance, if public agencies are allowed to bid on contracts, it will be necessary to have an independent third party, such as a public board or state procurement office, review the bids. In addition, rigorous cost-accounting standards will need to be incorporated to ensure that there are fair comparisons across public and private agencies (DHHS, 1997; Cooper, 2003).
Public purchasers must also recognize that for-profit and nonprofit agencies bring different strengths to the table. For-profit agencies may bring capital and higher levels of expertise or technology than nonprofit agencies. However, nonprofit agencies may have deeper roots in the community, and an appreciation of local needs, and perhaps, be in a better position to garner legislative and local support for a new contract. If both for-profit and nonprofit agencies are allowed to bid, the state must consider how the evaluation criteria will be weighted to reward the potential inherent benefits of each sector and protect the state from potential liabilities (Cooper, 2003). Another decision is whether to invite only in-state providers to bid or to open the solicitation to out-of-state providers as well.
Contracts can be classified in a number of ways. For example, public agencies can have:
In addition to determining the most appropriate contracting model to address agency needs, the public agency has to decide how many contracts to award, that is, how many eligible bidders will be accepted from the same solicitation. Using multiple contractors to deliver a service in a service region has the following advantages:
On the other hand, using multiple contracts has the following disadvantages:
Contracts can be pilot tested or administrators can decide to proceed directly to a local, regional, or statewide contract without a pilot. Some suggest that if the service is one that has been previously provided by a private agency, the decision to expand or change the terms of the contract may not be controversial. In that instance, the appropriate strategy may be to go directly to full implementation. On the other hand, when a public agency plans to contract for services never before purchased, opposition from one or more stakeholders is more likely. In which case, public agencies might want to pilot test the initiative in selected locations before attempting broad-scale implementation (DHHS, 1997). The 2007 aborted Texas privatization initiative illustrates how opposition may de-rail an agencys procurement plan and force mid-course corrections (see text box).(4)
In 2006, in response to a legislative mandate (SB6), the Department of Family and Protective Services (DFPS) began work to privatize foster care, adoption, and case management on a statewide basis. The agency released its request for proposals (RFP) for an Independent Administrator (IA), similar to the lead agency model in Florida. The IA would be responsible for procuring and managing selected child welfare services. The initiative was to have been rolled out, region by region, throughout the state.
While the state had a long history of contracting for foster care services, and some (though less extensive) experience with adoption, the state had never contracted for case management services nor had it ever contracted with an entity like the proposed IA. Opposition was fierce before the RFP was released and after bids were received and evaluated, an out-of state contractor was selected for contract negotiation. However, a series of events led the state to abandon the initiative before a contract was signed. Some suggest that the effort may have succeeded had the state not introduced the controversial case management component.
Pilot testing with a rigorous evaluation component allows all interested parties to determine whether privatization is a viable option for a particular service.(5) It also helps the public agency identify the potential costs, benefits, and barriers of contracting the service on a larger scale. In some states, contracts for small demonstrations or pilots can be executed on a non-competitive basis and knowledge gained from the pilot can then be used to develop a competitive RFP for expanded implementation.
Even if a decision is made to implement an initiative statewide, a state may decide to phase in the contract. For instance, in 1998, Florida passed legislation requiring the Department of Children and Families to contract out all child welfare services, with the exception of the child abuse hotline and investigations, by the end of 2004. The departments strategy for accomplishing this was to initiate a phased in approach that relied upon district (or county-wide) Invitations to Negotiate processes in which lead community-based care agencies were selected. Florida took five years to implement its community based care system, and lessons from the initial sites were used to implement later sites.
For example, Florida began using a two-tiered start-up phase for each of its districts. Contract terms and budgets for a transition (or start-up) phase were negotiated with the winning lead agencies. After successful completion of a series of deliverables and a readiness assessment process, service contracts were executed and cases were gradually transferred from state offices to private providers. Florida found that supporting a start-up phase with new or expanded contracts allowed providers to better prepare for full-scale service delivery (Freundlich & Gerstenzang, 2003).
There are advantages and disadvantages for choosing short or longer contracts. Contracts covering longer periods reduce the potential frequency of contractor turnover and the disruption in service provision that may accompany it. Longer contracts also may give contractors more opportunity to establish a program model and improve service provision over time (McConnell et al, 2003).
On the other hand, contracts of shorter duration increase incentives for contractors to launch programs quickly so that they can meet performance expectations in order to compete for future contracts. Shorter contracts may also contribute to increased competition by reducing the advantages of long-term incumbency. They also reduce risk by providing agencies more frequent opportunity to change performance targets or payments. Unsatisfactory providers can also be released more readily. Many contracts include provisions allowing the agency to terminate contracts before they expire, but doing so can be difficult (McConnell et al, 2003).
Most child welfare service contracts are multi-year (typically three to five years) but with an annual negotiation in which terms may change based upon the contractors performance and the public agencys annual budget. In practice, states and jurisdictions have adopted a wide range of contract practices. For instance, New York City which has one of the longest histories of contracting for child welfare services in the country, issues an RFP every nine years. Contracts are issued for three years with two, three year extensions.(6)
A well-written solicitation is the foundation of a solid service contract. It is critically important that a solicitation describes in detail and with clarity all the decisions that were made during planning, including the following:
Solicitation documents must also specify the format and content of a bidders proposals and clearly define how proposals will be evaluated (if it is a competitive procurement).
In competitive contracting, public agencies have several methods of soliciting bids and selecting a contractor. Some are more competitive than others. In child welfare, most competitive contracts begin with a RFP or, in the case of Florida, an Invitation to Negotiate (ITN). When competition is not desired or required, public agencies might be allowed to develop a Request for Qualifications (RFQ) or Invitation to Bid (ITB), in which the public agency describes service specifications and the bidder provides qualifications and quotes a price for the scope of work described. RFQs and ITBs might be appropriate to use when the public agency simply wants to negotiate service contracts or amend contracts with any or all qualified bidders, rather than selecting only a limited number of vendors through a competitive screening of proposals. While it is beyond the scope of this paper to detail similarities and differences in various solicitation methods, it is important to identify the basic elements that should be incorporated into any procurement document.
The procurement office in each state or local jurisdiction typically has its own requirements for what information must be included in any solicitation document and how it should be formatted. In most states, the solicitation contains not only the scope of work but also boilerplate language that is the same for all goods and services purchased by the state. Regardless of where the information must go in a procurement document, published guides on developing procurement documents cite twelve basic elements that should be included, summarized below:
The art of writing an effective solicitation document lies in carefully considering what the potential contractor needs to know about each of these elements and then presenting the information as clearly, accurately, and completely as possible. There are no unimportant elements. For instance, clear and explicit language about contract monitoring and follow-up activities is critical because in those instances when a private provider is not providing the agreed upon services, both parties must rely on the contract provisions that describe how the public and private agency will proceed if performance is not satisfactory (Freundlich, 2007).
Programmatic staff members usually assume lead responsibility for writing the scope of work for a solicitation, but procurement staff may draft major portions of the document and review and/or modify the scope of work as it gets incorporated into the required procurement format.
There are many challenges to overcome in writing a solid solicitation, including the following:
Hansen and Weisman (1998) make the following four recommendations for the preparation of a solicitation:
Rule #1: Determine the results you want first.
Rule #2: Decide the criteria you will use to select bidder(s) that can best deliver the results you want.
Rule #3: The evaluation procedures, which incorporate those criteria, should be well thought out before you issue the RFP.
Rule #4: Keep it short! Keep it open! Keep it simple and get only the information you will actually use to make an evaluation. (Hansen & Weisman, 1998, p. 27-30)
Various other published reports offer additional guidance to public administrators to make the RFP development go more smoothly (DHHS, 1997; FCS Group, 2005; McCullough & Freundlich, 2006):
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Given the critical role that private agencies play in child welfare service delivery, selecting contractors is one of the most important tasks for public agencies. There are three main objectives for procurement: (1) attract qualified bidders, (2) award contracts to the most capable providers, and (3) protect the integrity of the selection process (McConnell et al, 2003). All three may be affected by the quality of the solicitation document and how the procurement process is managed.
While it is important to set aside enough time to prepare the solicitation document, it is equally important to give providers enough time to respond to them. Given the complexity of child welfare service contracts, potential contractors usually have a surprisingly short time in which to prepare and submit their proposals. For full-service contracts, the typical period from the date of RFP issuance to proposal submission is six to eight weeks. Unrealistic timeframes may reduce the number of bids and the quality of proposals (DHHS,1997).
During the proposal preparation period, bidders do much more than write a proposal. They must learn as much as they can about the services and the caseload composition, assess infrastructure needs, analyze risks, recruit or assign key staff, develop partnership agreements with subcontractors or others, produce and package a coherent plan for meeting the contract objectives, and develop a competitive multi-year budget. In some instances, the bidder also must locate and secure acceptable facilities and equipment and produce a plan for interviewing, hiring, and training current public employees (DHHS, 1997).
Bidders are not the only ones who are rushed by short timeframes. From the time the RFP is released until contract signing, the public agency must complete most, if not all, of the following tasks:
The proposal solicitation, preparation, and review process gets compressed for a number of reasons. Often there is a firm deadline by which the service must be privatized. This might be due to a legislative mandate, a federal requirement to have a new service in place by a particular date, the need to award a contract by the end of the fiscal year or before the lease on the current facility expires, and so on. Working back from this deadline, the public agency sets a target date for issuing the solicitation. If the agency underestimates the amount of time needed, it may miss the issuance target date. Agencies that miss the intended date may try to get back on schedule by reducing the amount of time bidders have to prepare the proposal. It is little wonder that the usual first question at a pre-proposal conference is, can you extend the deadline for submitting proposals? (DHHS, 1997).
To the extent allowable by procurement rules, public agencies can release information in advance of a procurement to alert potential bidders to a soon-to-be announced contracting opportunity. In addition, holding public meetings enables potential bidders to begin working months in advance of the release.
The most important information potential contractors will need should be included in the solicitation document. But, particularly for large and complex contracts and in instances where the contractor is required to hire current staff or use state equipment and facilities, the bidder will need much more information than can be put into a document of reasonable length. Materials bidders may need to review include but are not limited to:
Some types of information can be easily reproduced and sent to bidders upon request. It is also becoming more common for public agencies to create electronic Procurement Libraries accessible through the agencys website.
If bidders are to submit informed proposals, they must be familiar with how the operation currently works. To impart this knowledge, many agencies have required potential contractors to attend pre-proposal conferences in which the solicitation is thoroughly explained. In addition, bidders have been given hands-on demonstrations of the public agencys automated case management systems.
As noted previously, not all public agencies require competitive child welfare procurement processes. However, when the number of potential bidders is greater than the number of contracts to be awarded, the public agency must ensure that the procurement process creates a level playing field for all eligible bidders to compete fairly.
To achieve this, the agency should make the contract process formal stick to published deadlines; provide the same information to all prospective bidders; and include in the RFP the bid evaluation procedure by which the winners will be selected, including the set of evaluation criteria and the weights for each. The agency should provide each member of the evaluation committee with detailed definitions of each of the rating criteria, emphasizing that these are the only criteria, and evaluators should be required to document their ratings (Hatry and Durman, 1985). Since agencies often place a higher priority on subjective selection criteria such as organizational capacity and program design than on concrete factors like cost and budget allocation, selection criteria should be clear and transparent including how elements of proposals will be rated (McConnell et al, 2003).
To further enhance the fairness and transparency of procurements, public agencies can engage evaluators who do not have close links with potential bidders, making certain that evaluators share a similar understanding of the selection criteria, undertake a complete review of proposals, and document the selection process thoroughly.
With respect to scoring, Hatry and Durman (1985) suggest requiring actual evaluator scores on individual criteria because rankings alone mask the magnitude of difference between competing proposals. For example, the first and second-ranked proposals could be very close or very far apart on a particular criterion, and this information would not be available if a system relied on rankings only.
Private agencies point out that even when a point system is used, bidders may not be able to distinguish themselves sufficiently from one another if the solicitation is not written to allow this. Many RFPs specify what the contractor is supposed to do and what performance standards (usually process related) they are expected to meet. As one contractor in a focus group put it, All we can say in the technical proposal is 'Yes, I will.' and 'I can do that.' So all bidders get essentially the same technical scores and it ultimately comes down to price. (DHHS, 1997)
One of the consequences of poorly constructed RFPs, criteria, or evaluation procedures is that they can lead to protests being lodged by losing bidders who felt that they were more highly qualified than the winner, but were under-bid for a contract or not given any opportunity to demonstrate their capabilities. Protests can quickly derail a contracting effort (DHHS, 1997).
What is the solution to this situation? There is no definitive answer that would work in every state given the variability in procurement rules across jurisdictions. A number of suggestions have been made, however, that individually or in combination may help shift the evaluation emphasis from cost to service quality (DHHS, 1997; FCS Group, 2005; Freundlich & Gerstenzang, 2003):
After the awards are announced, the public agency faces one remaining procurement challenge: the negotiation of the terms and conditions that will be in the final contract(s). The contract is the legally binding exchange of promises or agreement between parties that the law will enforce. Contract law is based on the Latin phrase pacta sunt servanda, pacts must be kept. The contract relationship is the legal relationship (Cooper, 2003).
Surprisingly, the whole procurement may derail at this late stage in the process if the parties discover they are not in agreement about the interpretation of the terms that were described in either the solicitation or in the bidders proposal. The public agency typically has three sets of concerns at the time of negotiation: (1) reaching agreement on how the agency ensures that services are delivered and outcomes are met; (2) ensuring accountability in all areas; and (3) creating a foundation that ensures an effective working relationship that is strong and yet sufficiently flexible to meet changing circumstances and unforeseen problems.
Until the 1990s, state and local public child welfare agencies generally dictated terms of agreements and private agencies either agreed or did not agree to the terms. These top-down contracts, sometimes called 'contracts of adhesion,' offered no opportunity for innovation or negotiation. At all levels of government today, there is a movement to place less emphasis on sticking strictly to the provisions of the RFP and to allow a greater degree of post-award negotiation to occur between the contracting agency and the provider (Cooper, 2003) In child welfare at the state and local level, the degree of true negotiation varies widely.
At one end of the spectrum are those public agencies that meet with providers and essentially present a contract for signature with limited or no discussion. The contract may be a short (three to five pages) form that simply references all the sections of the RFP, and indicates by signature that the contractor agrees with all terms and conditions.
At the other end of the spectrum are public agencies that use contract negotiation as an opportunity to demonstrate their willingness to collaborate in contract-related issues. There may be multiple meetings held prior to finalization of a new contract and/or at the time the contract is being renewed. For example at the initial meeting, all terms of the solicitation and all aspects of the proposal might be reviewed and both sides might raise issues for discussion, clarification, or amendment. Depending upon the number and nature of issues raised, public-private workgroups might be created to resolve issues and propose alternative approaches and language changes for inclusion in the final contract. While a collaborative approach might extend the time required for a finalized contract, it also might result in fewer implementation challenges that are typical in the first year of a new contract.
At a minimum, during contract talks, there should be an opportunity to ensure that both parties fully understand what is being agreed to related to the service delivery model, and to clarify decisions about which client outcomes and/or system/process outcomes will be tracked, how they will be measured, how frequently the results will be reviewed, and how the public and private agencies will use the data to continually improve performance.
After contracts are signed, the likelihood of success improves with a smooth transitioning of the services to the providers. This requires careful planning, open and regular communication, sufficient staff training, and adequate time to phase in the transfer of responsibility. While not all public agencies are willing to negotiate contract terms, most are taking the time to work with contractors on transition issues prior to referring cases. Public and private agencies often work together to plan a kick-off meeting and communicate with key stakeholders, finalize caseload projections and referral processes, clarify reporting and payment/invoicing procedures, plan for cross-training staff, develop problem-solving mechanisms, and plan for QA/contracting monitoring, including the approach to corrective actions. Challenges and strategies related to ongoing contract monitoring and management is addressed in the sixth and final paper in this series: Contract Monitoring and Accountability in Child Welfare Privatization Initiatives.
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Discussions were held with public and private agency administrators from five states with privatized case management contracts to identify what experienced states had learned about preparing contracts for case management services. The discussions were unstructured, exploring what the field had learned about preparing effective service contracts. The following five themes were each repeated across several states and often by both public and private agency representatives.
Lead agencies (also known as Community Based Care providers) in Florida have a unique perspective on service contracts as they serve as both providers for the state and purchasers of services from local community based case management agencies. Christy Kane, Senior Vice President of Community Based Care Operations for the Sarasota Family YMCA, Inc, explained: We want the providers to tell us how to make the system better within the parameters of state statute and non-negotiable contractual requirements. We do not want to micromanage their workforce decisions. In our contracts, we say 'here is the required array of services that should be made available to families' and we want providers to determine the best way to deliver the services. It is not one-size-fits-all kind of work, and systems of care should have the ability to be flexible and creative in order to meet the needs of the children and families being served. It is a continual challenge, but a goal we work toward.
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Developing an enforceable contract may be relatively simple and largely technical with routine purchases of goods. It is a different matter when public agencies contract for child welfare and other direct services for vulnerable children and families.
In general, there are several characteristics of a strong procurement process that results in an effective service contract. These include:
The contract is not an end in itself and it is not self-implementing. Its conceptualization, development and award must be imbedded in a larger process. Contracts must be negotiated with the implementation and management of the agreement as a primary focus. Again, regardless of how inclusive the planning process was, no one can think of all of the issues during the contract design phase. Ongoing opportunities to communicate and revisit contract terms will help ensure that private providers are able to meet the goals and expectations of government agencies.
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1. For a more detailed discussion about roles and responsibilities, see Issue Paper #3: Evolving Roles of Public and Private Agencies in Privatized Child Welfare Systems.
2. Many of these issues are covered in more detail in the first paper in this series: Assessing Site Readiness: Considerations about Transitioning to a Privatized Child Welfare System.
3. For a more detailed discussion about the range of service contracts and payment models, see Issue Paper #2: Program and Fiscal Design Elements of Child Welfare Privatization Initiatives.
4. Information for the textbox came from personal communication with Nancy Holman, Texas Alliance of Child and Family Services.
5. Readers interested in learning more about evaluating privatization initiatives are encouraged to read Issue Paper #4 in this series: Evaluating Privatized Child Welfare Programs: A Guide for Program Managers.
6. Personal communication with William McLaughlin, Office of Children and Families, New York State.
This project builds on the resources available at the Quality Improvement Center on the Privatization of Child Welfare Services (QIC PCW), funded by the Childrens Bureau. We want to acknowledge all of the state and county child welfare administrators and private providers that shared their experiences with us and the QIC PCW. Additional information on child welfare privatization issues is available through the QIC PCW Website: http://www.uky.edu/SocialWork/qicpcw/.
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To obtain a printed copy of this report, send the title and your mailing information to:Human Services Policy, Room 404E
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Human Services Policy (HSP)
Assistant Secretary for Planning and Evaluation (ASPE)
U.S. Department of Health and Human Services (HHS)
Last updated: 09/30/2008