Hatch, Bennet Introduce Pay-For-Performance Act

WASHINGTON – U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee and Senator Michael Bennet (D-Colo), member of the Senate Finance Committee, today introduced the Pay-For-Performance Act, a bill that aims to achieve better outcomes for beneficiaries and taxpayers alike. The legislation is a companion bill to the Young-Delaney Social Impact Bond Act in the House of Representatives.

The Pay-for-Performance Act directs resources to states and local communities to support innovative public-private partnerships to tackle social and public health challenges, while ensuring a smarter, more efficient use of tax dollars. These arrangements are sometimes called social impact bonds or pay-for-performance contracts.

“This bill infuses much needed competition into the social service contracting awards process,” Hatch said. “By replacing inefficient and duplicative spending with a structure that rewards positive outcomes, such as reducing the over-reliance on group homes for youth in foster care, with financial incentives, we increase the likelihood of improved outcomes for vulnerable individuals. If successful, Social Impact Pay for Performance Contracts could generate benefits for those using the services and the taxpayers that pay for them. This is a win-win scenario that makes common sense, and I am hopeful this bill will swiftly move through the Finance Committee.”

“This is a commonsense proposal for Colorado that empowers our local and state officials to make government work more effectively for our constituents,” Bennet said. “We should shift to a model of government where results matter, and where we pay for competence. By supporting targeted early interventions to improve outcomes in health care, education, job-training, child-care and a range of other government services, we can save taxpayer dollars and improve outcomes in our communities.”

Under a pay-for-performance model, a government enters into a contract with a service intermediary working to deliver a set of services that will ultimately generate positive outcomes, while also yielding a long-term savings to local, state, and federal governments. The savings will often accrue to a combination of those three levels of government.

“The Pay for Performance Act gives policymakers a critical, evidence-based strategy for dealing with major societal challenges. By connecting the tools of impact investing to a ‘what works’ approach, this bill takes us one step closer to a smarter, leaner, results focused government,” said Melody C. Barnes, former Director, White House Domestic Policy Council. “Senators Bennet and Hatch should be commended for providing a bi-partisan, national blueprint for cross sector investments in the outcomes our communities and country need.”

“I commend Senator Bennet and Senator Hatch for introducing the Pay for Performance Act. This bipartisan legislation would help speed up innovation in leveraging private funds to ensure public dollars are spent only on programs that work,” said Jim Nussle, former Director of the Office of Management and Budget (OMB) and U.S. Congressman from Iowa. “As a former Director of OMB and House Budget Committee Chair, I firmly believe we need government at all levels to spend the money we have in more effective, efficient ways. This bill takes us a step in the right direction.”

“Social Impact Bonds are being used by innovative governors and mayors to tackle some of our nation’s most intractable social policy challenges,” said Jeffrey Liebman, Professor of Public Policy at Harvard University and Director of the Harvard Kennedy School SIB Lab. “For the SIB model to reach its full potential, the federal government needs to be a partner in state and local projects that generate federal savings. This legislation has the potential to unleash exciting projects in policy areas such as early childhood education, diabetes prevention, and workforce development.”

Additional statements from supporters of the bill can be found here.

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