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The article examines the administration of drug policy and AIDS prevention in San Francisco, California between 1985 and 1990, the period during which the "second wave" of AIDS was spreading among injection drug users (IDU) and their sexual partners. The following socio-historical analysis examines the development and ultimate disintegration of a the National Institute of Drug Abuse (NIDA) outreach demonstration AIDS project in San Francisco drawing on Social Worlds or Arena theory. The analysis is able to examine much of what government sponsors like NIDA routinely rely on and take for granted in funding demonstration projects. Efforts in San Francisco to expand AIDS prevention services to IDU from a small-scale pilot project to the entire metropolitan area in I 986. An important part of this effort was the submission of a grant application in response to request for proposals by NIDA to fund demonstration outreach projects. As was required the proposal described both the detailed intervention plan and evidence of collaboration and coordination with appropriate drug abuse, research, community service, and public health agencies. Analysis of the proposal and its aftermath indicates that in the pursuit of governmental funding, research projects, service agencies and community-based organizations may agree "on paper" to certain cooperative arrangements but such agreements can mask many areas of long standing conflict.