This study develops a multi-level approach on frontline interactions in the public sector. Previous research suggests that detailed analyses of frontline interactions are essential to our understanding of how welfare services take shape when policies and rules are applied and negotiated in individual cases. The dynamics and performances of real-time interactions have, however, rarely been analyzed as such. This study shows how the methods developed in the field of Conversation Analysis can contribute to this research. Our multi-level approach integrates analyses of the policy-and institutional transformations that shape conditions for frontline interactions; and analyses of how policies and rules are evoked, negotiated and reshaped in the turn-by-turn organization and performances of interaction. The approach is applied on an analysis of how rules regarding financial aid are applied in an authority highly affected by changes in welfare policy towards standardization and detailed regulations. The empirical case is the Swedish Board for Study Support. The empirical study includes analyses of documents, interviews and analyses of taped telephone conversations. The study shows how institutional arrangements of standardization, detailed regulations, monitoring and depersonalization, structure the frontline work and shape narrow frames for officials' discretion in interactions with clients. The study also shows how rules are invoked and negotiated in recurrent practices in the interaction: in the careful design of decisions; in the investigations of alternatives and exceptions from the rules in order to find solutions to the client's problems. The analyses of concrete interactional practices clearly indicate that also a rule-governed work dominated by task discretion involves recurrent negotiations, flexibility and local policy-making.