39.103 Modular contracting
Source: FAR 39.103 on acquisition.gov
Modular contracting breaks IT acquisitions into manageable, independent increments to reduce risk, improve performance, and keep pace with technology changes.
Overview
FAR 39.103 establishes the principles and requirements for modular contracting in the acquisition of information technology (IT) systems. Modular contracting is designed to reduce program risk, incentivize contractor performance, and provide the government with timely access to evolving technology. Agencies are encouraged to use modular contracting for both major and non-major IT systems, breaking acquisitions into manageable increments that can be delivered, implemented, and tested independently. Each increment should comply with IT standards and agency architecture, and contracting officers must select appropriate contract types and methods to facilitate future increments without obligating the government to additional purchases. The regulation also sets recommended timelines for contract award and delivery to avoid technology obsolescence.
Key Rules
- Use of Modular Contracting
- Agencies should use modular contracting for major and non-major IT systems to reduce risk and improve outcomes.
- Incremental Acquisition
- IT systems may be acquired in smaller, manageable increments, each capable of independent operation and delivery.
- Standards and Architecture Compliance
- Each increment should comply with commercial IT standards and the agency’s IT architecture.
- Contracting Techniques
- Contracting officers must select contract types and methods that support future increments and avoid obligating the government to additional purchases.
- Timeliness
- Contracts should be awarded within 180 days of solicitation, and deliveries should occur within 18 months to prevent obsolescence.
Responsibilities
- Contracting Officers: Structure contracts to support modular increments, select appropriate contract types, and adhere to timelines.
- Contractors: Deliver workable, independent increments that comply with standards and agency architecture.
- Agencies: Oversee compliance with modular contracting principles and consider cancellation if timelines are not met.
Practical Implications
- Modular contracting helps manage risk and adapt to technological changes in IT acquisitions.
- It requires careful planning, contract structuring, and adherence to timelines to ensure successful implementation.
- Common pitfalls include failing to structure increments for independence, not complying with standards, or missing award/delivery timelines.
(a) This section implements http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2308&num=0&edition=prelim" target="_blank">41 U.S.C. 2308. Modular contracting is intended to reduce program risk and to incentivize contractor performance while meeting the Government’s need for timely access to rapidly changing technology. Consistent with the agency’s information technology architecture, agencies should, to the maximum extent practicable, use modular contracting to acquire major systems (see 2.101) of information technology. Agencies may also use modular contracting to acquire non-major systems of information technology.
(b) When using modular contracting, an acquisition of a system of information technology may be divided into several smaller acquisition increments that-
(1) Are easier to manage individually than would be possible in one comprehensive acquisition;
(2) Address complex information technology objectives incrementally in order to enhance the likelihood of achieving workable systems or solutions for attainment of those objectives;
(3) Provide for delivery, implementation, and testing of workable systems or solutions in discrete increments, each of which comprises a system or solution that is not dependent on any subsequent increment in order to perform its principal functions;
(4) Provide an opportunity for subsequent increments to take advantage of any evolution in technology or needs that occur during implementation and use of the earlier increments; and
(5) Reduce risk of potential adverse consequences on the overall project by isolating and avoiding custom-designed components of the system.
(c) The characteristics of an increment may vary depending upon the type of information technology being acquired and the nature of the system being developed. The following factors may be considered:
(1) To promote compatibility, the information technology acquired through modular contracting for each increment should comply with common or commercially acceptable information technology standards when available and appropriate, and shall conform to the agency’s master information technology architecture.
(2) The performance requirements of each increment should be consistent with the performance requirements of the completed, overall system within which the information technology will function and should address interface requirements with succeeding increments.
(d) For each increment, contracting officers shall choose an appropriate contracting technique that facilitates the acquisition of subsequent increments. Pursuant to parts 16 and 17 of the Federal Acquisition Regulation, contracting officers shall select the contract type and method appropriate to the circumstances (e.g., indefinite delivery, indefinite quantity contracts, single contract with options, successive contracts, multiple awards, task order contracts). Contract(s) shall be structured to ensure that the Government is not required to procure additional increments.
(e) To avoid obsolescence, a modular contract for information technology should, to the maximum extent practicable, be awarded within 180 days after the date on which the solicitation is issued. If award cannot be made within 180 days, agencies should consider cancellation of the solicitation in accordance with 14.209 or 15.206(e). To the maximum extent practicable, deliveries under the contract should be scheduled to occur within 18 months after issuance of the solicitation.