The purpose of our paper is to assess the evolution of the government-owned, contractor-operated (GOCO) system as a market-based management form, focusing specifically on recent changes in contract reform. What is the institutional context in which the GOCO system is embedded, and how does it affect success of the GOCO system? What are the lessons of the GOCO system for designing and adopting market-based structures for managing government institutions? Our paper (and the two companion papers published in this volume) is based in part on a much larger study (Bozeman, Kingsley, Rainey, Youtie, & Wilson, 2001) that included interviews and intensive case studies of three national laboratories. The ensuing sections of this paper provide a descriptive backdrop for understanding the problems of contracting and contractor competition at the national laboratories. The conclusions, analysis, and recommendations provided are based on the extensive case studies provided in the larger study (Bozeman et al., 2001), but, with the exception of a few examples, the case data are not presented here. (However, these data can be examined in the full report, which is available at www.rvm.gatech.edu/reports.htm.)