THE CASE STUDY INVOLVES A DRUG ABUSE PROGRAM THAT RECEIVES FEDERAL SUPPORT BUT IS UNDER THE LEGAL JURISDICTION AND CONTROL OF THE SPONSORING ORGANIZATION INTO WHICH IT WAS INTEGRATED. THE STUDY ILLUSTRATES THE PERCEPTUAL CONFLICT MODEL; I.E., THE FUNDAMENTAL DIFFERENCE IN HOW MANAGEMENT AND SERVICE PROVIDERS VIEW SERVICE INTEGRATION. THE SPONSORING OR LEGALLY RESPONSIBLE ORGANIZATIONAL UNIT TENDS TO VIEW SERVICE INTEGRATION AS AN INTRAORGANIZATIONAL PROBLEM TO BE RESOLVED IN THE CONTEXT OF THE ORGANIZATION'S DOMAIN. THE SERVICE PROVIDER UNIT VIEWS INTEGRATION AS AN INTERORGANIZATIONAL PROBLEM TO BE RESOLVED THROUGH NEGOTIATIONS TO EFFECT A 'MERGER.' THE STUDY ILLUSTRATES THAT SERVICE INTEGRATION IS SEPARATE AND DISTINCT FROM ADMINISTRATIVE OR PHILOSOPHICAL INTEGRATION. QUESTIONS AND PROBLEMS RELATED TO PROVIDING SERVICE TO A GIVEN POPULATION ARE RESOLVED MORE EASILY THAN QUESTIONS RELATING TO ADMINISTRATIVE JURISDICTION, CONTROL, AND PHILOSOPHY OF TREATMENT. NEGOTIATION AND EMPHASIS ON SPECIFIC ISSUES (AS OPPOSED TO EMOTION-LADEN, ESSENTIALLY UNRESOLVABLE ISSUES) ARE SUGGESTED AS STRATEGIES FOR MANAGING THE INTERORGANIZATIONAL-INTRAORGANIZATIONAL PERCEPTION CONFLICT. REFERENCES AND AN ADDITIONAL BIBLIOGRAPHY ARE INCLUDED. (LKM)