Introduction

The growing use of Payment by Results and other forms of outcomesbased commissioning raises significant questions about the direction of public administration reforms. Here, we consider why and how such innovations in commissioning arrangements have developed, and how they might be theorised.

To date there is a very limited literature in this area; and that which does exist largely focuses on either: (a) criticising such commissioning arrangements as examples of marketisation, or (b) examining the use of such instruments in specific sectors or specific arrangements. There is little detailed examination of the theoretical underpinnings of outcomes-based commissioning.

We suggest that there are three potential theoretical drivers of outcomes-based commissioning. These are not necessarily alternative or complementary explanations. First, such innovations can be seen as the logical next step in the New Public Management (Hood, 1991) reforms implemented by the UK and US governments with a view to improving public sector efficiency. Second, they can be viewed as an attempt by policy makers to deal with complexity in the social world. Finally, they can be explained as a means by which policy makers seek to facilitate and develop new and existing philanthropic activity and social enterprise.

We evaluate each explanation and, in particular, discuss the extent to which policy objectives motivate outcomes-based commissioning. We go on to discuss the theoretical criticism of such commissioning models. The extent to which these promises and problems are observed in practice is the focus of Chapter Five. In conclusion, we discuss the implications of outcomes-based commissioning theory on wider discussions about the use of PbR in the UK, the US and worldwide.

Theories and objectives

It is no new observation that public interventions may fail to deliver, or may not deliver as well as might have been hoped, solutions to social problems. Outcomes-based commissioning may be viewed as a measure developed by government seeking to address these shortcomings.

PbR is a broad term applied to a number of the wide variety of outcomes-based commissioning strategies used by government (Battye, 2015). The common theme is that payment is made, in part or entirely, contingent on the achievement by the contracted agent of specified goals or targets.