I would like someone to explain the typical meaning of the term
"contract course" in the college world.  I gather that it has
something to do with courses that are created external to the
university but offered to university students.  How does this work. 
What is the nature of the business relationship between the school and
the outside resources?

Hello--

I have researched your question and have your answer.

In short, contract courses in the college world are classes that are
in part or in whole paid for by an outside company or agency. The
classes are typically only offered to those associated with the
sponsoring company or agency.

I will explain in detail.

I first conducted a Google Search for the following terms:
"What is a contract course"

One site came up, which producted a very good explanation for how it
works at one school, the Illinois State University. You may view the
results of my search online. The link is
://www.google.com/search?hl=en&lr=&ie=UTF-8&oe=UTF-8&q=%22what+is+a+contract+course%22&spell=1

The explanation ISU provides says a contract course is a course in
which a company or outside agency pays the school to offer the course
or program.

"The company or agency pays for whatever is negotiated into the
contract, i.e., faculty salary, travel, materials, university service
fee, tuition, etc. A good example is the MBA program that we deliver
in Decatur for ADM, Bridgestone-Firestone, Caterpillar and Illinois
Power employees. Contract courses require different processes for
set-up and scheduling, but they do follow the same guidelines for
student admission and registration."

ISU recommends those interested in contract courses to contact the
Extended University office to arrange contract courses.

You may view this full college Q&A Page online. The link is
http://216.239.37.100/search?q=cache:ckoZwbvaCPYJ:www.arr.ilstu.edu/Registrar/facultystaffadvisor/extcourseinstructman.pdf+%22what+is+a+contract+course%22&hl=en&ie=UTF-8

I then conducted a Google Search for the following terms: 
"contract course" creation

You may read the full results of my search online. The link is
://www.google.com/search?q=%22contract+course%22+creation&hl=en&lr=&ie=UTF-8&oe=UTF-8&start=10&sa=N

I then located an individual who is knowledgeable about contract
courses through George Mason University. I found an attached phone
number at the following site http://ocpe.gmu.edu/aboutus/staff.html

I called the office at George Mason University responsible for
arranging contract courses. The representative told me that contract
courses are courses paid for and arranged by a company, agency, or
government body as part of an ongoing professional training. She said
the courses can be in the classroom or outside the classroom and in a
professional setting. She said GMU does a lot of contract course work
with government agencies.

The individual told me contract courses are pre-arranged and a
contract is devised between the school and sponsoring organization
outlining in detail what is expected for the course.

She further told me that there is such a thing as an "open enrollment
contract course," which is either in part or in full paid for by an
outside company or organization, as well. But in these open enrollment
contract courses, anyone can enroll. You don't have to be affiliated
with the sponsoring organization. Further, she said these open
enrollment contract courses are usually taken only on a pass/fail
basis.

I hope this helps. If you need any clarification or further
information, please don't hesitate to click the "clarify" button.

I'm happy to help,

darrel-ga

Great answer.  Thanks.