Agile Development in Government Contracts

Agile development in government contracts refers to the application of iterative, incremental software delivery methodologies - including Scrum, Kanban, and Scaled Agile Framework (SAFe) - to federally funded IT acquisitions. Agile adoption in the federal government accelerated following the 2012 issuance of the Digital Government Strategy and the subsequent TechFAR Handbook, published by the Office of Federal Procurement Policy (OFPP), which provided specific guidance on adapting Federal Acquisition Regulation procedures to support agile contracting. Agencies use agile contracts to procure working software in short delivery cycles rather than waiting for a single large deliverable at contract end.

What is agile development in government contracts?

The TechFAR Handbook explains how existing FAR authorities - including time-and-materials contracts, indefinite delivery indefinite quantity vehicles, and modular contracting under FAR 39.103 - can support agile delivery. Modular contracting, in particular, allows agencies to break large IT acquisitions into smaller, successive modules, each with its own contract and deliverables, reducing the risk of large-scale program failure.

On agile contracts, deliverables are typically defined as working software increments (sprints or program increments) rather than design documents or specification deliverables. Performance work statements for agile contracts describe the outcome sought and the quality standards for each sprint rather than specifying how the work must be performed, preserving the contractor's discretion over technical approach.

The U.S. Digital Service Playbook and 18F's De-risking Guide for Government Technology provide additional frameworks that acquisition teams and contractors reference when structuring agile programs. The Playbook emphasizes starting with user needs, using open standards, and delivering working software in short cycles.

Why it matters for contractors

Agile contracts require contractors to structure their teams, tools, and processes around sprint-based delivery rather than phase-gate delivery. This affects how contractors staff programs: product owners, scrum masters, and DevSecOps engineers are standard team roles on agile IT contracts, and their labor categories must be mapped correctly in the contract's labor-hour structure.

Quality assurance on agile contracts shifts from end-of-project testing to sprint-level acceptance criteria. Contractors must work with agency product owners to define clear definition-of-done standards for each user story and sprint. Disputes over acceptance of sprint deliverables are common when acceptance criteria are vague, making precise sprint planning and documented acceptance a risk management priority.

Agile contract vehicles increasingly require contractors to demonstrate experience in continuous integration and continuous delivery (CI/CD), automated testing, and integration with government DevSecOps platforms such as DoD Platform One. Proposals that describe mature agile engineering practices with measurable past performance evidence score well against technical evaluation criteria.

Example

A software contractor wins a task order to modernize a benefits processing application for a civilian agency. The contract uses time-and-materials ordering with sprint-based deliverables. Each two-week sprint produces tested, deployable working software reviewed by an agency product owner. The contractor's scrum master facilitates sprint reviews with agency stakeholders, and the product owner accepts or rejects each user story against pre-agreed acceptance criteria. After six sprints, the agency has a partially functional system in production rather than a design document awaiting a future delivery date.