During the transition period, the countries of Eastern Europe and the Commonwealth of Independent States have witnessed the combination of sharp decentralization of government responsibilities to the local level, the creation of a flourishing nonprofit sector, and a growing need for NGOs to generate income beyond donor assistance to expand services. Russia is no exception. In this environment a strong case can be made for social service NGOs to be contracted by local governments to provide these services on behalf of city agencies. This arrangement provides a funding base for NGOs and introduces healthy competition into service delivery. This monograph describes and analyzes the early experience of several Russian local governments with contracting out. The main conclusion is that for this type of contracting out to be successful will require greater professionalism--of most NGOs in service delivery practices and local government agencies in contracting and in monitoring contractor performance. The author argues for a shift in some donor-supported training activities away from advocacy to service delivery NGOs.