In several OECD countries, welfare-to-work delivery is contracted-out to private agencies competing in quasi-markets for clients, contracts, and outcome payments. But a key question regarding this ‘market governance’ of activation concerns the way accountability systems shape frontline decision processes, and whether providers paid by results will target only those for whom outcomes are easier to achieve. While the internal sorting of clients for employability has received much attention in studies of quasi-markets in employment services, less is known about how performance management shapes the official profiling, categorization and targeting of recipients for activation at the point of programme referral. Drawing on case studies of four agencies in the Australian quasi-market, this study examines the ways in which frontline staff work to contest and revise how jobseekers are officially classified by the benefit administration agency. With this assessment pivotal in determining the level of payments that agencies can receive, and the activity requirements that clients must meet, we find that reassessing jobseekers so they are moved to a more disadvantaged category, exempted from conditionality requirements, or removed from the system entirely, have become major elements of casework. These category manoeuvres have multiple effects. They may result in some clients being shielded from harsh sanctions. They also protect providers against adverse performance rankings by the purchaser. Yet, an additional consequence is that jobseekers are rendered fully or partially inactive, within the context of a system designed and mandated to activate.