From Mike Raker’s perspective, the growing use of outcome-based contracting within the government presents an opportunity amplified by recent disruptions to the federal workforces and organizations.
When federal agencies and vendors embrace this proven contracting model, both can benefit, said Raker, chief technology officer at Maximus.
“We’re mutually aligned in terms of incentives. If a project fails, we fail together. And there’s no debate as to whether or not it was a success,” he shared on Federal News Network for our Forward-Thinking Government series.
There’s no finger pointing or confusion. Instead, there’s transparency and there’s data to help identify where things went sideways, Raker said. But success is also more likely, he noted, because everyone is now aligned on the same deliverable and incentivized to achieve it. The agency wants to advance its mission, and the contractor is rewarded financially. Plus, there’s downstream benefits for both too, Raker said.
“I’m more apt to provide a strategic investment in a partnership with an innovative Silicon Valley company to drive better outcomes and continually improve what our company can bring to agencies going forward,” he said. (Discover more benefits in the sidebar below, “Why embrace outcome-based contracting.”)
But how can agencies and government contractors get there? We asked Raker to offer a roadmap for establishing a solid outcome-based contracting model. Here are his six recommended steps.
Step 1: Start with clear outcomes
From the get-go, agencies should establish a shared understanding of the desired mission or business impact — not just technical goals — and vendors should help with that, Raker said.
“One of the first steps with any good customer relationship is making sure that we have a clear view of what the outcome is that we’re trying to deliver,” he said. “You have to start with a clear identification of what are those outcomes that determine success.”
Step 2: Use multidimensional metrics
Agencies will also want to employ layered variables to define success, cost, innovation, uptime, quality — and then rank their relative importance. Again, Raker pointed to this being a joint effort between the government and its contractors.
“Often, what we’ll do is talk about the different attributes of the outcomes,” he said.
For instance, it might make sense to create a radar diagram that details the multiple elements that contribute to the success of the outcome, he said. That can help prioritize the tactics but still push the vendor to drive a great solution, Raker said. “It may be more important to deliver the same service at a lower cost, but at the same time, we want to bring innovation to the table with the agility to change and adapt overtime based on the needs and priorities of the customer.”
Step 3: Run stakeholder workshops
Next, agencies will want to bring together decision-makers, end users and operators together to identify true beneficiaries and relevant metrics.
“We often facilitate workshops with our customers and our customer experience teams to pinpoint who is truly impacted by the systems we’re building,” Raker said. “Through these workshops, we identify the real stakeholders and define the outcomes that drive meaningful results to the mission, not just contract results.”
Step 4: Design flexible, adaptive contracts
Now, it’s time to address the contracts themselves. Raker recommends moving beyond static agreements to dynamic data-driven frameworks that evolve with real-time needs and mission goals.
This model enables agencies and contractors to approach each technical effort almost like a live command and control system, he said. “If the mission changes, we will still foundationally understand the business value. Agencies will have a resilient and adaptable contract structure. It’s not based on a contract that might have been written years ago. It’s based on the live data within the construct of the contract.”
Step 5: Align incentives around performance
The government should design contracts that incentivize vendors to invest, innovate and take ownership using financial incentives and shared risk to drive better performance, Raker said.
“If mission outcomes aren’t achieved, there are additional performance incentives or payments with reductions,” he said. That ensures that government contractors “are bringing our best foot forward.”
Step 6: Start small — with prototypes and pilots
Post award and before full-scale implementation, agencies will want to use proof-of-concept initiatives to test approaches, technologies and metrics, Raker advised.
“When agencies shift to outcome-based contracting, a proof of concept can provide the critical next insight – a way to test a solution on part of the problem, measure the outcomes, and ask: Did we get it right? Did the technology, approach and change management all align?’ All the elements of the recipe have to come together.”
Why embrace outcome-based contracting
Maximus Chief Technology Officer Mike Raker offered seven reasons that make outcome-based contracting worthwhile both to federal agencies and government contractors:
Shared delivery responsibility: Contractors take physical and operational responsibility for outcomes, including hosting solutions within secure boundaries (e.g., FedRAMP), which increases accountability.
Proof of value through prototypes: Using proof of concepts allows for testing hypotheses and validating outcomes before scaling, reducing risk and improving transformation success.
Outcome-based incentives: Payment is tied to measurable results like throughput, quality, speed and customer satisfaction — motivating vendors to invest in better tools and technologies.
Access to cutting-edge tech: Outcome-based models encourage vendors to bring in innovations from the commercial sector , bridging the gap between public and private capabilities.
Empowerment of small and medium-size businesses: Lowering barriers to entry through pilot programs helps small companies contribute to government modernization efforts.
Artificial intelligence and advanced analytics: Leveraging AI, digital twins and simulations can enhance service delivery and inform public policy decisions.
Data ownership clarity: Vendors are incentivized to deliver outcomes without holding government data hostage — ensuring that transparency and control remain with the public sector.
Discover more ways to use technology to reimagine how your agency meets its mission in our Forward-Thinking Government series.
The post 6 steps to transform federal services with outcome-based contracting first appeared on Federal News Network.