Classroom observations are increasingly common in education policies as a means to assess the quality of teachers and/or education programs for purposes of making high-stakes decisions. This article considers one policy, the Head Start Designation Renewal System (DRS), which involves classroom observations to assess the quality of Head Start programs in order to decide whether their funding is renewed. This article applies an argument-based approach for evaluating the validity of observational assessments that (a) explicates assumptions that underlie the presumed logic, leading from the collection of scores from observations of Head Start classrooms, to the inference that scores assess the quality of Head Start programs, to the decision to renew funding to Head Start programs, and (b) summarizes evidence that speaks to the plausibility of each assumption. There was limited evidence to support the plausibility of many assumptions, including those pertaining to score generalizability, predictive validity, and the cutoff scores set as minimum standards of quality. Implications for improving the validity of classroom observations and the accuracy and fairness of decisions in the Head Start DRS are discussed.