"Accountability" is a classical term in management theory, but new in education. It is the product of the process of performance contracting, in which a public authority grants money to a local educational agency to contract with private enterprise to achieve specific goals within a specific period for specific costs. This process can be engineered as follows: (1) the local educational agency employs a management support group (MSG); (2) the MSG works with other groups to produce a set of general specifications called a Request for Proposal (RFP); (3) the RFP is the subject of a pre-bidding conference; (4) the revised RFP is issued and actual bids are entertained; (5) the local school board selects the best bid and negotiates a performance contract with the aid of the MSG; (6) the local education agency employs an Independent Educational Accomplishment Audit team (IEAA) to monitor execution of the performance contract and to certify results for purposes of payment. The Texarkana Dropout Prevention Program under ESEA Title VIII was the first to use performance contracting in education and it stimulated numerous inquiries and proposals from other cities. This new approach requires increased flexibility in funding, which could be achieved by greater local control. (RT)