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Kuva: Topias Dean /Sitra

Published June 7, 2019

Social outcomes contracting interests EU member states

Social outcomes contracting is an innovative form of procuring services based on outcomes rather than outputs. It offers new opportunities for combining and directing public and private resources towards positive social impact. Its practical implementation can make us of social impact bonds or other similar operating models.

From Sitra’s point of view, social outcomes contracting is important because it:

  • ensures the effective use of tax revenue;
  • enables investments (also) in proactive and preventive action;
  • requires strong knowledge-based management.

To support countries wishing to develop outcomes-based approaches, the European Investment and Advisory Hub (a joint initiative of the European Commission and the European Investment Bank, under the Juncker plan) launched the Advisory Platform for Social Outcomes Contracting in October 2018. The platform was launched together with the Finnish Ministry of Social Affairs and Health and is also supported by the Finnish Innovation Fund Sitra. The initiative supports the development and use of social outcomes contracts (including social impact bonds, payment-by-results contracting, etc.) as a strategic and operational tool for delivering social impact and innovation to address key social inclusion challenges in Europe and contribute to society’s increased well-being.

The insights gained from this collaboration could be considered by the Finnish Ministry of Social Affairs and Health within the context of its planned key theme, the Economy of Wellbeing, under the Finnish EU Presidency in the second half of 2019.

Expertise and political support are needed

As part of the development of outcomes-based approaches, Sitra conducted a survey on the current state and the prospects of social outcomes contracting. The survey was conducted during March and April 2019. Respondents represented 20 organisations and 14 EU member states.

According the findings of the survey, social outcomes contracting is not a widespread course of action in EU member states, apart from the UK. Reasons for this are the legal uncertainty about the use of social outcomes contracting in public procurement and the lack of a strategy for outcomes-based approaches, for example. At the same time, the survey’s respondents suggested that outcomes contracting could benefit the employment of disadvantaged groups and the inclusion of young people. From an environmental point of view, outcomes contracting could bring added value to the procurement of energy and transportation services, for example.

In conclusion:

  • social outcomes contracting is not yet a widely known concept;
  • its potential is not yet being fully realised because of legal uncertainty and a lack expertise, as well as a lack of political support and funding;
  • experts who know the concept see the potential of social outcomes contracting;
  • there is a growing interest and need for social outcomes contracting.

The findings of the survey were discussed for the first time in a technical meeting led by the European Investment Bank in May. The meeting took place in Brussels with representatives from seven EU member states and three Directorate-Generals of the European Commission. The discussion outlined the actions to be implemented to help EU member states adopt outcome-based approaches. The work will continue in the next meeting in Helsinki in September.

Read more

Social outcomes contracting and public procurement in various EU Member States. Summary of answers to the questionnaire (pdf)

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