Eckerd Family Youth Alternatives (EFYA), a not-for-profit organization has been providing services for children and youth for 20 years. At first the organization was soley privately funded. But 5 years after it began, Florida contracted with EFYA to operate therapeutic educational wilderness programs for emotionally disturbed youth. Similar programs have been licensed and accredited in five other States. In addition, EFYA operates a shelter care program and secure and nonsecure residential programs for delinquents. Such privatization offers great potential for meeting service needs and provides a means for seeking the best design and management for programs. Private-sector providers can provide less expensive service expertise, start programs more quickly, make innovative changes in existing programs, and provide services more cost effectively. For contract service to be successful, the private sector must have a clear understanding of what Government is trying to achieve. Government should expect providers to have high quality management and services staff, to document its plans, to meet professional standards, and to have evidence of previous successful performance. The consequences of entering into a contract should be clearly understood by both sectors, and contracts should be structured to support specialization and expertise, flexibility, and options for program and policy development. 6 references.