What does "Performance-Based Contracting" involve?

Performance-Based Contracting involves structuring contracts to focus on the achievement of specific outcomes rather than merely the delivery of products or services. This approach emphasizes the results that the contractor must deliver, encouraging innovation and efficiency. By defining clear performance metrics and standards, both parties understand the expectations, which helps in aligning the contractor's incentives with the desired outcomes.

This method stands out from traditional contracting approaches that might detail every aspect of the work (such as exact specifications) without necessarily tying performance to specific goals. Performance-Based Contracting encourages contractors to find the best ways to achieve the outcomes, which can lead to improved efficiency and solutions tailored to meet the client's needs directly. Utilizing this contracting strategy maximizes value and effectiveness in securing services and products, as it inherently drives the contractor towards excellence in performance.