(1) There is hereby established in the office the state pay for success contracts program. The purpose of the state program is to provide authorization, subject to specified requirements and limitations, for the office to enter into pay for success contracts with one or more lead contractors for the provision of program-eligible interventions.

(2) Before entering into a pay for success contract authorized by this section, the office, one or more local governments, or the office and one or more local governments shall conduct a request for proposal process. The request for proposal must describe the desired population to be served, desired outcomes, and the potential duration of a pay for success program and may include performance targets. The office shall make a request for proposal issued pursuant to this subsection (2) publicly available on its website upon its issuance.

(3) The office, or the office and one or more local governments as authorized by subsection (4) of this section, may enter into a contract with a lead contractor for the provision of program-eligible interventions. Entry into such a contract is generally subject to the requirements of the "Procurement Code", articles 101 to 112 of this title 24, and the office is encouraged, but not required, to use the request for proposals process specified in section 24-103-203. When developing and reviewing the terms of a pay for success contract, the office may consult with the state treasurer on financial terms and with experts to provide advice regarding definition of appropriate performance targets. A contract shall not require or authorize the state to use federal moneys to make success payments unless federal law or federal regulations authorize the use of federal moneys forthat purpose. Before it enters into a contract, the office shall make the contract available to the public on the office's website and provide an opportunity for public comment regarding the contract. Prior to entering into the terms of a contract, a contract must:

(a) Clearly define the type, scope, and duration of the program-eligible interventions that the lead contractor will directly or indirectly provide, which it must provide by implementing a new program or expanding the population served by an existing program, or both, and the specific outcomes sought based on defined performance targets. The interventions that a lead contractor directly or indirectly provides must not supplant any existing state, local government, or school district employee who is providing the same interventions that the lead contractor will directly or indirectly provide.

(b) Detail the roles and responsibilities of each party to the contract and identified subcontractors;

(c) State that once the contract is executed, an investor that is funding the activities of a lead contractor under the terms of the contract is prohibited from dictating the manner of delivery of services to be provided under the terms of the contract by the lead contractor or any other provider that are not related to the potential for the project to deliver the success measures in the contract. This paragraph (c) does not prohibit an investor from performing due diligence on its investment or managing the investment.

(d) Provide for an objective process by which an independent evaluator determines whether the defined performance targets have been achieved;

(e) Specify that the provision of program-eligible interventions provided by the lead contractor may not exceed a period of seven years unless one or more defined performance targets specified in the contract is met within the first seven years in which the interventions are provided, but the evaluation of the success of the contract may take into account outcomes that occur at any time after the provision of program-eligible interventions has been completed;

(f) Specify the procedures that the lead contractor must follow to request payments and a repayment schedule;

(g) State that any request for payment made by the lead contractor is subject to approval by the office and that the obligation of the office to make any payment is subject to annual appropriation by the general assembly; and

(h) Include a clause that specifies any causes for and the procedures for early termination of a contract, requires at least ninety days notice to each party to the contract and any service provider of a proposed termination, and requires a transition plan that minimizes any negative impact on the individuals being served by the lead contractor should early termination occur.

(4) With the approval of the office and the lead contractor, one or more local governments may be additional parties to a contract to be entered into by the office as authorized by subsection (3) of this section if the chief financial officer and the governing body of each participating local government review and approve the terms of the proposed contract. Any contract that includes one or more local governments as additional parties shall provide for the allocation of payment responsibilities between the state and each local government if the lead contractor meets the defined performance targets specified in the contract.

(5) The office shall enact a sustainability plan based on successful outcomes and performance for those program-eligible interventions that yield savings as assessed by an independent evaluator. If requested by the office or the state auditor, the independent evaluator shall provide its assessment and the data underlying its assessment to the state auditor for review. The office shall annually make publicly available a summary that identifies the defined performance targets met and not met and amounts of success payments paid.

(6) (a) The pay for success contracts fund and the office of state planning and budgeting youth pay for success initiatives account of the fund are hereby created in the state treasury. The principal of the fund and the principal of the account respectively consist of:

(I) Money appropriated or transferred to the fund or the account by the general assembly that has become available or is expected to become available due to direct or indirect reductions in state spending resulting from the provision of program-eligible interventions programs under a contract entered into pursuant to subsection (2) of this section; and

(II) Any other money that the general assembly appropriates or transfers to the fund or the account.

(b) Interest and income earned on the deposit and investment of money in the fund is credited to the fund; except that interest and income earned on the deposit and investment of money in the account is credited to the account. Subject to annual appropriation by the general assembly, the office shall expend money in the fund and in the account to make payments to the lead contractor as required by a contract and to pay any administrative expenses incurred in connection with a contract. The office shall expend money in the account solely for the programs listed in section 24-37-404, but the department of human services may expend any money appropriated to it from the account for personal services and operating expenses related to the administration of any contract.

(7) Funding provided by a nongovernmental entity for a program to be implemented under the terms of a pay for success contract is not a grant, as defined in section 24-75-1301, even if the funding is not ultimately required to be repaid because the entity receives contractual consideration from the state in exchange for the funding in the form of a promise to make success payments if the program is successful.

(8) Unless otherwise specifically provided, nothing in this section exempts the state, a lead contractor, or any other person involved in the provision of services being provided through a program that is implemented through a pay for success contract from the requirements of any applicable federal, state, or local law or rule.