Privatization in Practice: Case Studies of Contracting for TANF Case Management. Balancing Flexibility and Prescription in Requests for Proposals


As agencies draft RFPs, they establish the latitude they will offer TANF case management contractors in program design and operation. An RFP may present a detailed program model and specific implementation methods. Alternatively, it may articulate only the general framework of a program and require contractors to describe the means they will use to accomplish particular goals. The belief that privatizing services can spur innovation often leads public agencies to give contractors more freedom. This aim must be balanced, however, against the necessities of meeting state and federal requirements  which mandate certain program features  and of ensuring that clients receive appropriate services.

Agencies in study sites strike different balances between flexibility and prescription in RFPs, basing their choices in part on the scope of services to be privatized and their previous experience with contracting. In Delaware, for example, potential contractors had considerable leeway in deciding how to design and deliver case management services. The division of employment-related case management into two programs, one for job placement and one for retention, helped make this flexibility possible. Accordingly, Delawares RFP presented a set of performance goals and basic program requirements, but obliged applicants to offer additional, quantifiable performance targets along with service strategies for achieving them. This design was intended to focus contractors attention on outcomes while encouraging them to develop creative approaches to service delivery.

A negative experience with a contractor that operated one-stop centers led the Lower Rio Grande Valley Workforce Development Board to increase the specificity of its RFP. After discovering that its provider lacked effective service provision and fiscal monitoring processes, the board required subsequent applicants to furnish extensive detail on how they planned to run programs and manage one-stop operations. Although the boards most recent RFP did not prescribe service delivery strategies, it included questions regarding the components of individual programs  for example, outreach, intake, and assessment for TANF clients  and required bidders to present explicit procedures for each activity. Board staff felt this approach would encourage potential contractors to plan comprehensively, and that clients of the one-stop centers would receive better service as a result.

Getting expert assistance or outside feedback on balancing flexibility and prescription in RFPs has helped some agencies develop requests that both convey clear expectations and support contractor innovation. Delaware administrators hired an external consultant specializing in outcome funding to aid their development of a results-oriented RFP. Procurement specialists and welfare agency staff in San Diego County engaged a wider group of experts by preparing a request for information and a concept paper before issuing their RFP. The request for information solicited ideas on structuring employment case management services from a number of academics, government officials, and organizations familiar with welfare programs. It also gauged levels of interest and capacity among potential contractors. A later concept paper requested additional suggestions for program and RFP design, particularly regarding outcomes-focused payment models and strategies for encouraging contractors to interface with county staff and employers. Agency staff in both Delaware and San Diego County felt they were able to draft more effective RFPs as a result of the input they received.

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