This paper focuses on the economic, social, and political considerations of contracting. The increasing tendency of government to contract services is attributed to higher financial stress facing local governments, a growing political belief that the extent of government should be reduced, and the perception that the private sector is a more efficient service provider. While the potential exists for cost savings, transaction costs of negotiating contracts can be substantial. A poorly written contract can wreak havoc on future opportunities and affect the community trust to engage in such activity. Public officials should insist on a performance clause in the contract that protects both seller and buyer. Local officials can reduce uncertainty by thoroughly exploring alternative strategies before making the formal decision to contract services. A key issue that encompasses economic, political, and social concerns is how the benefits to contracting are distributed. Equity of access to services should be considered by communities contemplating shifts in the method of service provision. Land grant universities and cooperative extension services might assume an important role in helping local communities faced with service provision problems. Extension agents have a long history of engaging in community development activities. Intergovernmental contracting, or contracting from another unit of government, has been another popular strategy adopted by local units for the provision of services to citizens. This paper offers appendices giving a state-by-state listing of constitutional and statutory legislation related to intergovernmental contracting and a list of services most often contracted. (TES)