This study examines the trend toward competitive contracting of government functions. By focusing on four jurisdictions that hired private firms to handle welfare-to-work services, it reveals the ways in which increased contracting with the private and nonprofit sectors is changing the role and capacity of government, threatening accountability and responsiveness to groups with special needs. Encouraging improved performance through market mechniams creates particular challenges for the nonprofits who must balance their missions with the bottom line. The organization of service delivery to welfare clients has undergone significant restructuring as a result of the 1996 Welfare Reform Act, which encouraged states to contract with outside companies and for the first time allowed them to determine eligibility for welfare benefits. Seeking to assess the impact of this development, M. Bryna Sanger studied the competitive contract environment in San Diego, Milwaukee, New York and Houston. Interviewing contractors, public officials, opinion leaders and researchers revealed the comparative advantages of a variety of key players in the multisector service industry. Sanger's conclusions paint a complex picture of how competitive contracting arrangements have changed the ways vendors and government agencies serve their clients. While performance and innovation have improved in some cases, all the players are finding that adequate accountability and contract monitoring are more difficult and expensive than anticipated. Both for-profits and nonprofits are quickly draining talent and capacity as they compete for experiences executives from government and from each other. Sanger argues that competitive contracting is here to stay, but it will require more - not less - government maagement and oversight. She urges scholars and practitioners to develop a more nuanced and sophisticated set of expectations about the costs and benefits of increased market arrangements for service delivery, especially when serving vulnerable populations.