Agile Contracting

Agile contracting is a flexible acquisition approach that aligns with Agile development principles, enabling the Government to procure IT solutions incrementally.

Governed by FAR Part 39.103, it leverages modular contracting to support iterative development, continuous integration, and evolving requirements. Instead of rigid, large-scale contracts, Agile contracting uses time-boxed, performance-based, and flexible agreements such as IDIQs, T&M contracts, and Development-as-a-Service (DaaS) to ensure rapid adaptation. By breaking down IT acquisitions into manageable, testable increments, Agile contracting reduces risk, accelerates delivery, and fosters innovation in software development and modernization efforts.

Agile Contracting is often surrounded by misconceptions—many assume it lacks structure or isn’t well-supported by FAR. In reality, FAR Part 39.103 explicitly promotes modular contracting, which aligns perfectly with Agile principles. However, discussions often focus more on “Agile” itself rather than how contracting can effectively enable Agile development.

The Connection Between Modular Contracting & Agile Development

Agile development thrives on incremental, iterative progress, and modular contracting aligns perfectly with this approach by structuring contracts in smaller, flexible increments. Instead of committing to a large, rigid contract, Agile contracting allows the Government to procure software and IT services incrementally, adjusting as needs evolve.

How Modular Contracting Supports Agile

1. Flexible Acquisition Strategy – Agile requires continuous feedback, iterative improvements, and adaptability. Modular contracting enables smaller contracts that align with sprints or releases.
2. Reduced Risk – By breaking IT acquisition into smaller, manageable pieces, Agile teams can validate progress at each stage, reducing the risk of large-scale failures.
3. Faster Delivery – Agile contracting allows for rapid procurement of development teams, DevSecOps services, cloud infrastructure, and security support, ensuring quick deployment.
4. Evolving Requirements – Since Agile embraces changing requirements, modular contracts can be modified, extended, or replaced without disrupting the overall program.
5. Continuous Integration & Testing – Contracts can include built-in testing, validation, and security assessments, ensuring each iteration meets performance and compliance standards.

Agile Contracting Strategies in Modular Contracting

• Time & Materials (T&M) Contracts – Ideal for Agile teams when scope is uncertain but rapid adjustments are needed.
• Indefinite Delivery, Indefinite Quantity (IDIQ) Contracts – Provides a flexible framework to issue task orders based on evolving needs.
• Performance-Based Contracts – Focuses on achieving Agile outcomes rather than rigid deliverables.
• Managed Services & Development-as-a-Service (DaaS) – Enables scalable Agile teams to work iteratively while ensuring consistent delivery.

Real-World Application

For example, a federal agency modernizing its IT systems using Agile could leverage modular contracting by:

1. Issuing an initial contract for Agile team support (scrum masters, DevSecOps, UX designers).
2. Procuring cloud services via IaaS/PaaS contracts to host development environments.
3. Contracting cybersecurity experts to ensure compliance with evolving security standards.
4. Using Microservices contracts to support independent, modular software development.

This structure ensures that as Agile teams iterate on software development, contracting mechanisms remain flexible, responsive, and aligned with Agile principles.

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