Pay for Success: Analyzing and Evaluating an Emerging Way of Government Contracting

Pay-for-Success (PFS) is a government contracting model whereby the

commissioning agency offers payment to a contracted firm only upon

successful completion of a project, unlike traditional payment models that

offer payment regardless of outcomes.

PFS-based contracts for

environmental outcomes have been gaining traction in the United States,

as the PFS model incentivizes the contracted firm to efficiently complete

the project at reduced costs and risks to the commissioning agency. As

payments are withheld until predetermined outcomes are achieved, this

approach encourages firms to work at a faster pace while maintaining the

desired level of quality.

PFS-based contracts for environmental outcomes are being implemented in

various parts of the U.S ranging from Anne Arundel County, Maryland to

Sacramento County, California for projects such as land restoration and

stormwater management. Today, governments and organizations have seen

PFS as a means of generating the most cost-effective environmental

benefits.

Ongoing data from these projects shows a 63% cost

reduction in environmental outcomes over a 5-year period,

ultimately creating a cleaner and better-managed

environment.

For additional information, read the full report or email Harry Huntley