Governments engage with the private sector in several ways, one of which is through contractual agreements to provide services to the population on the governments’ behalf (the process of ‘contracting out’). The importance, feasibility and effectiveness of this contracting process in the health sector is disputed, particularly in states where the government is unable to adequately deliver fundamental services. This manuscript reviews the literature on contracting between governments and the private sector and analyses the basic principles and technical aspects of contracting, using experiences of countries worldwide. While there are stories of success with contracting for healthcare services in fragile states, this depends largely on individual properties of the countries in question, including levels of government backing and support, familiarity with engaging private providers and monitoring and evaluation schemes. Keeping this in mind is essential in benefiting the populations, governments and contractors in question.