Limit contract sizes

Using a single vendor over a long period of time, or for a large number of teams, may feel more comfortable, but it inevitably leads to vendor lock-in. Breaking up projects into several small contracts incentivizes vendors to build a sustainable software ecosystem, instead of a monolith, and makes each contract small enough that the odds of success increase markedly.11

Require that no more than \$2 million be spent on any single contract annually, and that no contract last for more than three years, including option periods. That way, you’ll get no more than two development teams from a single vendor. If the project needs more development teams, obtain them from another vendor and have them work separately. Limit the RFP, too, keeping it below 20 pages; don’t spend any longer than 60 days writing it.

In addition to preventing lock-in, there’s another benefit to using smaller contracts: they’re less likely to be protested, because the dollar value doesn’t justify the trouble and legal costs. If you’re respectful and transparent with vendors, and don’t require hundreds of pages of proposals, they will likely want to do business with your agencies in the future.

As the number of people who work on a project increases, so does the amount of time that all of those people have to spend coordinating with each other. The solution to this is to have them work in parallel, which is possible when building with loosely coupled parts. Having more than one vendor team working on your project also provides you with more competitive options if you need to change vendors.


  • [ ] If the project will require multiple contracts, the scope of the first contract has been identified, and there is a general idea of what some other contracts may be comprised of
  • [ ] If there will be more than one development team, service-oriented architecture (SOA) will be employed
  • [ ] When possible, contracts will be sized within the simplified procurement threshold so they can be awarded quickly and easily
  • [ ] The identified first project has relatively low technical complexity, low political risk, and high end-user value, so that teams can start practicing working this way while experimenting and learning in a relatively low-risk environment

Key questions

  • Have the relevant contracting officers read this handbook?
  • Do the contracting officers understand that they’re not being asked to do all of the work that goes into a \$50 million contract? Do they understand that \$2 million contracts are far easier to award and that, under agile, they’ll also be much easier to manage?


11. In The Standish Group’s 2014 CHAOS Report, based on a survey of 25,000 software projects, they found that software projects’ outcomes get worse as more money is spent. Limiting the spending on each contract segments the project into smaller components, making each component — and the entire project — more likely to succeed. ↩︎