Over the past decade, there has been a movement in North America toward a performance-based contract (PBC) model for maintaining and managing road networks. In traditional method-based contracts, the owner agency specifies techniques, materials, methods, and quantities, along with the time period for the contract. By contrast, in a PBC, the client agency specifies certain clearly defined minimum performance measures to be met or exceeded during the contract period. PBC is a type of contract in which payments are explicitly linked to the contractor's successfully meeting or exceeding certain clearly defined minimum performance indicators. Therefore, the selection of a PBC model for maintenance and rehabilitation differs significantly from that of a traditional asset management contract. Also, a PBC is more complex because of the pavement deterioration process and probability of failure to achieve the specified level of service for various performance measures along the contract period. A novel framework was developed for the selection of maintenance and rehabilitation activities with a model for pavement performance prediction and linear optimization. A case study based on data from the second generation pavement management system of the Ministry of Transportation Ontario is used to illustrate the framework.