To cut costs, some administrators are contracting with the private sector for such services as pupil transportation, facilities maintenance, and cafeteria operations. Proponents of competitive contracting assert that it can provide public schools with the kind of expertise, flexibility, and cost efficiencies not always available with inhouse service provision. This document offers reasons for private-sector contracting and describes the scope of current service-provision practices in the areas of food service, busing, and maintenance. It describes four steps in deciding whether to opt for alternative methods of service provision, discusses five stages in the bidding process, and describes pitfalls to avoid. Case studies highlight the experiences of several school districts. Two tables and two figures are included. Appendices contain suggested performance measures, suggestions for overcoming employee opposition, principles of successful contracting, information on charter schools, five sources for recommended reading, and a list of contact organizations. (LMI)