In 1995, a new government was elected in the province of Ontario, on a platfo reducing the deficit, balancing the budget, reducing the size of the civil service, and a stronger role for the private sector. At that time about 50 percent of the performance of highway maintenance in Ontario was outsourced, but the Ministry of Transportation (the ministry) managed and directed all work. Other jurisdictions were experiencing success in effectively contracting out various portions of highway maintenance without reducing service levels. The ministry carried out and documented a business case and risk analysis of options for, and benefits from, privatized operations. The ministry's goals were ensuring appropriate service standards are met (particularly winter), achieving value for money, creating an environment that is conductive to the development of new methods and technology, and developing a sustainable highway maintenance industry that is well positioned to deliver a full maintenance program in the long term. The ministry's role would concentrate on policy and standards development, priority setting, contract monitoring and evaluation. As a result, between 1996 and 2000 the ministry outsourced 100 percent of maintenance operations. A blended approach of two contract types, Managed Outsourcing (MO) contracts and Area Maintenance Contracts (AMC), was developed. In MO areas a number of smaller functional contracts are managed and directed by the ministry. In AMC areas, larger contractors perform most or all of the maintenance activities in a 300 to 500 equivalent 2-lane km area under a lump-sum payment system. The AMC contractor manages and plans the work in order to fulfil the standards and specifications in the contract. There were a number of challenges involved in the contract development, implementation and management. It was imperative to document the ministry's legislated responsibilities and (formerly in-house) specifications in a manner that was biddable for contractors. The level of implicit and explicit risk shared by the contractor and the ministry was carefully articulated to ensure that the government would benefit from privatized contractor innovation and efficiencies and that contractors would not be subject to excessive risks due to unpredictable events such as unusual weather. Processes and documents for the AMC request for proposal process, evaluations, internal estimates and awards were completed. Communication with industry organizations was continued throughout the process. The outsourcing is now complete. Maintenance work is being delivered to standard, and the province's standards have been reformatted to support the new delivery methods. The ministry has monitored and carried out quality assurance on the contractor's performance and is also confident that the ministry's legislated responsibilities are being fulfilled. The savings goal of five percent was met.