Privatization in Practice: Case Studies of Contracting for TANF Case Management. Designing Contracts That Work


Designing effective contracts is one of the most challenging  and consequential  aspects of privatizing TANF case management. Whether contractors provide services as intended depends largely on the specific provisions of the agreements they sign. Public agencies contracting out make a host of choices about contract design. The three most important are: the performance measures to include, the structure of payments to the contractor, and the duration of the contract.

This chapter examines each of these three contract design decisions, drawing on the experiences of the study sites. Section A begins by discussing the issues related to performance measures. The different types of payment structures used in contracts and the implications of these structures are discussed in Section B. The chapter concludes in Section C with a discussion of considerations in setting the duration of the contracts.

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