The major steps a college should undertake in contracting for services, including the initial determination as to whether or not contracting is the best way to provide a particular service, are described. Three general activities that apply to decisions about contracting in most circumstances are: investigating service characteristics; identifying service objectives; and defining performance standards. Performance specifications for most services required by a college could include a schedule of work; a list of materials and/or equipment to be provided by the contractor or institution; and facilities that will be available for performing the service. The next phase includes the activities necessary to evaluate the relative merits of feasible service delivery alternatives and select to the most appropriate one. In making this determination, it is important to evaluate the cost-effectiveness and quality of the services offered under each alternative. The effects of different alternatives on employees, including student workers; on the cohesiveness and integrity of the campus community; and on current collective bargaining agreements must also be considered. The third phase deals with issues that must be resolved to ensure that the specific alternative chosen is best from the institution's point of view, and that the selection process itself is open and fair. In selecting a contractor, it is important to develop a service budget, prequalify bidders, develop a request for proposal, solicit bids, and evaluate the proposal. The final phase encompasses the development and negotiation of the contract documents, administration of the contract, and periodic evaluation of the contractor's performance. (SW)