- Risk/reward contracts: In the future, learn from this situation and negotiate risk/reward contracts if you can. These have to pay out more than what the contractors can earn from hourly work, if the contractors meet specific, tangible milestones before their due dates, and as much as they would earn if they make their due dates. And they still have to pay a reasonable hourly amount, too -- these can't be the equivalent of pure-commission sales compensation.
- Socialization: On the contractors' side, this is called "going native." On your side it's a matter of encouraging contractors to think of themselves as being part of the team and part of the company. The more they feel an emotional attachment to your company, the project, and their pride in the project's outcome, the more likely they are to work hard in spite of their perverse incentives.
- Future carrots: Depending on the nature of your department, you might make it clear that the better they do, the more likely you are to invite them to the next dance. This works in proportion to how plentiful other work is at the moment.
- Direct conversation: Whatever else you do, take the time to have an honest, non-accusatory conversation about the situation you all are in. Simply making your contractors aware that their incentives are at odds with their professionalism; that you recognize the difficulty of the situation; and that you appreciate their professionalism in working hard anyway can go a long way toward ameliorating the problem.
This last point is an excellent example of a basic leadership principle: Most of the time, most people will live either up or down to your expectations.
Which means it's important for you to make your expectations clear and for your expectations to be high.