This interview-based study explores trust in public-private co-operation by addressing the research questions: What are the main sources of distrust in public-private contracting? And why? We compare two Spanish social services subfields: one with high levels of cross-sector distrust and another one with low distrust between public and private sectors. We conclude that the sources of the identified cross-sector distrust are institutional: insufficient regulation and legislation, lack of business certification, and low local government administrative capacity. The article is a pioneering exploration of the under-researched theme of institutional distrust and its effect on public-private co-operation management.