This report presents the findings of exploratory research designed to identify the characteristics of the outsourcing of instruction at community colleges and the forces that promote or block its spread. It is the second in a series of reports by the National Center for Postsecondary Improvement and the Community College Research Center on the relationship between for-profit higher education and community colleges (Bailey, Badway, & Gumport, 2002). The report is based on information gathered from interviews with community college administrators and representatives of contracting firms. Interviews were conducted with the persons responsible for managing contracts with outside organizations for instructional services at eleven community colleges. With one exception, all of the administrators interviewed are responsible for non-credit occupational programs. However, two oversee both non-credit and credit programs and three have joint appointments as faculty in college-credit divisions. Senior managers were also interviewed from two firms that provide instructional services under contract to community colleges: Alamo Learning Systems and I/Tech. An in-depth case study of I/Tech was conducted because it is the best example of a full-service contracting model--where the contractor provides a wide range of services to the college--and provides some insights into the potential for the most ambitious efforts to contract out instruction. As a result of the many difficulties faced by community colleges in their attempts to outsource instruction, and the hesitance of some vendors to become involved in partnerships that might not be profitable, it seems unlikely that the subcontracting of instruction will be used extensively in community colleges, although it will remain a factor in the non-credit sector. However, the underlying factors that make contracting attractive will still be present in community colleges: the difficulty that faculty has in staying up-to-date in their fields, the great variation in the quality of curricula and instruction, and the inflexibility of the conventional approach to teaching and organizing instruction. These factors, more than direct competition from private vendors, are likely to provide the greatest impetus for change in teaching and learning at community colleges specifically, and in higher education institutions more generally. Appended are: (1) Interview Guides; and (2) Case Study of I/Tech. [Report produced by Community College Research Center.]