Education-technology companies, tutoring providers, and other vendors entice districts with pledges to boost math or literacy achievement.
But for years, they’ve been paid the same amount whether their products and services delivered—or flopped.
Recently, some districts have moved to tie vendor payments at least in part to whether providers make good on their promises, such as better learning outcomes or academic progress.
The practice, known as outcomes-based contracting or OBC, holds promise for K-12 education, according to a report released this month by WestEd, a research organization, on behalf of the Center for Outcomes Based Contracting, a nonprofit that champions the approach.
“Overall, the findings suggest that OBC has strong potential to improve implementation integrity, strengthen district-provider partnerships, and contribute to positive student outcomes, when implemented with clear target populations, sufficient dosage and duration, and strong organizational capacity,” the report said.
The report cited specific examples of how the outcomes-based approach was successful in K-12 education. For instance, one literacy tool yielded a 28-percentage point gain in proficiency for 2nd graders in one school district, though there weren’t similar increases for older students, WestEd found. In another district, students who received literacy tutoring were substantially more likely to meet their growth goals in reading. And in a third instance, data suggest a math tutoring intervention may have helped spur significant student growth in the subject.
The contracting arrangement also improved implementation of tutoring and ed-tech interventions, and bolstered collaboration between districts and vendors, according to the WestEd report.
What can prevent outcomes-based contracting from working?
To be sure, the analysis offers some caveats about outcomes-based contracting.
School districts must ensure that they are keeping up their end of the bargain by implementing a program or tutoring service according to a provider’s instructions. That might mean training staff appropriately on how to use a digital literacy tool or making the right population of students available for tutoring services.
The connections with vendors in an OBC arrangement felt different to district leaders, compared to more traditional contracts.
“We work with vendors all the time, but it’s more: OK, they sell us something, they train us on it, and then they kind of go away,” said one anonymous district leader quoted in the report. “[But with our OBC partners], both companies assigned us our own special person to keep in contact with, and we met with them weekly.”
The findings matter, because contracted services make up about 11% of district budgets, a share exceeded only by staff compensation, according to 2024 data from the National Center for Education Statistics cited in the report.
“Having clear data on vendors’ performance and their services’ impact on student outcomes serves a dual purpose,” the report said. “It provides public accountability and equips district leaders with the information needed to make informed decisions about which contracted services to sustain, scale, or discontinue.”
The approach works best when districts have the know-how to implement a tool or tutoring program, collaborate with vendors to make sure they are implementing a product or service as intended, and get educator buy-in, including at the school level, WestEd concluded.
“I think we were successful because we stay connected all the time. All the time,” the district leader quoted in the report added. “The day one student said they couldn’t understand their tutor, I was on the phone with [the provider]. Nothing waited. … I feel like it’s a quick turnaround time to resolve issues.”
WestEd examined eight districts across four states (California, Florida, Mississippi, and Texas) that tied payments to education technology providers or tutoring services in part to outcomes. Researchers conducted interviews with educators and vendors, reviewed documents, and analyzed student achievement data to evaluate the strategy and identify some promising practices.
Researchers cautioned that they could not establish a positive association between academic progress and the procurement approach in many of the district-vendor pairings examined, in part because of implementation hiccups. In one case, a significant number of students deemed eligible for an intervention didn’t end up receiving it. In another, students were supposed to get the intervention for 25 weeks but only wound up getting it for two months.
How did contractors feel about the outcomes-based arrangement?
Some appreciated the potential to build or strengthen relationships with districts. Others worried that they were taking a financial risk in signing on, since the impact of their service or tool could be affected by implementation problems beyond their control.
For example, if a teacher trained to use a particular digital learning platform suddenly left their position, it might take time for someone new to learn the ins and outs, meaning the company couldn’t deliver the results it promised on the agreed-upon timeline.
“There’s all these things at the district level that could impact our outcomes and therefore our payment,” one unidentified provider told researchers. “So we do feel like we have an outsized share of the risk because we have to set up this program and assume all those fixed costs and setup costs.”
