This article examines the implementation of privatization policies in two 'Next Steps' agencies. This is discussed with reference to the broader theoretical and empirical questions of how do institutions change and when are political actors constrained in implementing their policy choices. Cortell and Peterson's framework for explaining institutional change, and the concept of intra-state policy networks are used to analyse the cases. The differential outcomes identified illustrate how constraints operate and how these may be overcome by strategic actors to produce change. Constraints in these cases arose from fragmentation and dependence in central government, from differing institutionalized beliefs and from the development of intra-state networks between the departments and agencies. The paper concludes by suggesting that the type of intra-state networks created through agencification can be seen to have an effect on policy outcomes and are worthy of more detailed research.