This chapter examines the current role of contracting in the management of governmental organizations and how the contribution of contracting could be improved if elected officials and senior administrators understood how best practice contracting could support enterprise strategic goals. The chapter also looks at the complex and dynamic environment of public sector contracting and suggests steps that leaders in governmental organizations can and should take to transform this area of activity from a routine function into a powerful management tool. The challenges that must be addressed to effect such transformations are discussed. A proper understanding of best practice contracting is essential in an era of networked governance (Salamon, 2000).