Modular Contracting

A contracting technique that uses of one or more contracts to acquire information technology systems in successive, interoperable increments. Modular contracting is intended to reduce program risk and to incentivize contractor performance while meeting the U.S. Government’s need for timely access to rapidly changing technology. 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.

Source: FAR, Subparts 39.002 and 39.103