The impetus for contract health services stems from the need to control costs, solve critical staffing problems, and prevent real or threatened court intervention. Benefits of contracting include cost control, access to a wide spectrum of expertise, more competitive personnel recruiting, and improved management supervision of health care. Whether contract services are onsite or offsite, the agency is entering a major financial agreement and must take time to prepare an adequate request for proposals. Successful contract services require a partnership between vendor and contracting agency. In developing a contract, the language should specify the type, level, and location of health care providers, costs, monitoring and evaluation procedures, and penalties for vendor failures. Since hospitalization and specialty services may account for 30 to 60 percent of health care dollars in a contract, a contract specifying a hospitalization cap but permitting the contractor to apply for catastrophic supplements provides a means of dealing with cost overruns.