Contract Types

Overview

Governments around the world use structured contract mechanisms to procure technology products and services efficiently, transparently, and at scale. These contracts typically pre-define terms, pricing, and performance expectations, allowing public agencies to issue orders quickly as needs arise. While names and administrative models vary by region, the underlying goals are consistent: reduce procurement lead times, ensure accountability, and support evolving delivery methods such as agile development.

In the United States, the federal government widely uses vehicles like Indefinite Delivery/Indefinite Quantity (IDIQ) contracts, Blanket Purchase Agreements (BPAs), and Multiple Award Schedules (MAS) managed by the General Services Administration (GSA). These models support both competition and speed, especially for recurring needs or modular technology projects.

The European Union and United Kingdom rely on Framework Agreements, which allow multiple vendors to be pre-qualified under a common structure. Public sector buyers then issue specific “call-offs” or run mini-competitions under the framework. This system balances flexibility and fairness while supporting agile procurement.

In Canada, similar instruments include Standing Offers and Supply Arrangements. These approaches standardize vendor qualifications and pricing while allowing departments to place orders without undergoing a full tender process.

Australia uses Panel Contracts, where vendors are grouped into panels for services like IT, legal, or infrastructure support. Orders are made under established terms, promoting both efficiency and accountability.

In India and other parts of South Asia, Rate Contracts and platforms like the Government e-Marketplace (GeM) serve similar functions. They centralize vendor registration, negotiate baseline pricing, and allow authorized buyers to procure frequently used goods and services.

• Across all these systems, governments aim to achieve:
• Greater purchasing efficiency
• Cost control through volume pricing
• Performance assurance via standardized contracts
• Support for iterative, agile-friendly procurement in select contexts

Whether labeled as MAS, Framework Agreements, or Panel Contracts, these global contract forms represent a shift from ad hoc procurement toward strategic, managed acquisition ecosystems.

Contract Types

1. Indefinite Delivery, Indefinite Quantity (IDIQ)

Indefinite Delivery Frameworks are a category of procurement contracts used by governments around the world to streamline the acquisition of technology goods and services. These contracts establish pre-approved terms and pricing for future purchases, allowing agencies to place orders only when the need arises. Rather than specifying exact quantities or delivery dates at the time the contract is signed, agencies issue individual orders—commonly referred to as task orders, call-offs, or purchase orders—throughout the life of the agreement. This flexibility makes them ideal for situations where requirements are ongoing but not fully predictable.

Although the concept is broadly similar worldwide, the names and structures of these frameworks vary by country. In the United States, the federal government uses a model called Indefinite Delivery/Indefinite Quantity, or IDIQ, which permits agencies to issue task orders against a standing contract. Another common U.S. mechanism is the Blanket Purchase Agreement (BPA), often used by both federal and local agencies. Some city and state governments in the U.S. also use Standing Offers, a term shared with other countries.

In the United Kingdom and across the European Union, similar contracts are typically called Framework Agreements. These allow public-sector buyers to procure from a list of pre-qualified vendors over a set period, using a process known as "call-offs" for each specific need. In Canada, both Standing Offers and Supply Arrangements serve similar purposes, while in Australia, these contracts are generally known as Panel Contracts, referring to a panel of suppliers that agencies can turn to for goods or services.

To ensure performance under these frameworks, governments typically include Service Level Agreements (SLAs) and clear deliverable expectations in each individual order. These SLAs define the scope, quality, timelines, and standards expected for that specific delivery. Agencies often conduct periodic evaluations of vendor performance, assessing metrics such as timeliness, responsiveness, and quality. These evaluations can influence future ordering decisions, adding a competitive incentive for vendors to maintain high standards. In some cases, individual orders may also contain penalties for poor performance or bonuses for exceeding expectations, further aligning vendor behavior with government objectives.

One common concern with long-term contracts is vendor lock-in, the risk of becoming overly dependent on a single supplier. Indefinite delivery frameworks help mitigate this risk when structured properly. When multiple vendors are approved under a single contract, agencies can compete each order among them, which encourages pricing discipline and service innovation. However, in single-award frameworks, where only one vendor holds the contract, the risk of lock-in is higher. In these cases, buyers must be especially careful to include clauses that preserve data ownership, allow for future transition, and maintain flexibility over the contract’s life.

These contracting models are particularly well-suited for agile projects, which prioritize iterative development, modularity, and flexibility in response to user feedback and changing requirements. Because agencies can issue frequent, narrowly scoped orders within an overarching framework, the process aligns well with agile methods such as sprint-based development and modular service design. When multiple vendors are available within the framework, agencies can rapidly assemble specialized teams or switch providers as project needs evolve, avoiding the delays of full-scale procurement processes for each change.

Regional Names and Usage

• United States: IDIQ (federal), BPA (federal, local), Standing Offers (some cities)
• United Kingdom & EU: Framework Agreements
• Canada: Standing Offers, Supply Arrangements
• Australia: Panel Contracts

Performance Assurance:

• Task/delivery orders define metrics
• SLAs are included
• Performance reviewed per order

Vendor Lock-in:

• Moderate to high with single vendor
• Lower with multi-award IDIQs (task order competition)

Agile Suitability:

• Good fit with multi-vendor, flexible task orders
• Supports iterative and evolving work

2. Public-Private Partnerships (PPPs)

Description: Public-Private Partnerships (PPPs) are long-term contractual agreements between government entities and private-sector companies, typically used to deliver large-scale infrastructure or public services. In a PPP, the private firm may be responsible for designing, financing, building, operating, and maintaining the asset or service, with repayment often tied to performance over decades. These arrangements are designed to leverage private sector expertise and capital while ensuring the delivery of public benefits.

PPPs are widely used across the globe, with established frameworks in the United Kingdom, Canada, Australia, India, South Africa, and across the European Union. Projects often include transportation (e.g., highways, rail systems), hospitals, schools, utilities, and even digital infrastructure like broadband networks or smart city platforms.

What distinguishes PPPs from traditional procurement is the integration of responsibilities and risks. Rather than simply purchasing construction services or equipment, the government contracts with a private consortium to deliver an entire outcome—such as maintaining a road at a set level of quality for 30 years, or operating a wastewater facility according to public health standards. In return, the consortium may receive availability payments, user fees, or a share of revenues generated by the project.

To ensure performance, PPP contracts rely heavily on detailed service-level metrics, enforceable standards, and performance-linked payments. For example, a transit system operator might face reduced compensation if trains run late or fail to meet accessibility targets. Contracts can also include penalties for underperformance, bonuses for exceeding benchmarks, or revenue-sharing arrangements that align public and private incentives.

However, one of the most significant challenges in PPPs is vendor lock-in. These are highly specialized, capital-intensive arrangements, often spanning 20 to 30 years, and involve deeply integrated systems that are not easily transferred or replaced. Once a private partner is embedded in the delivery of a public service, switching providers midstream can be costly, disruptive, and politically sensitive. For this reason, PPPs demand strong governance frameworks, clear accountability structures, and exit clauses to protect the public interest over time.

When it comes to agile delivery, PPPs tend to be a poor fit. Their structure is inherently rigid, with long planning cycles, fixed financing, and carefully negotiated performance obligations. However, modular contracting approaches can allow for some agility within PPPs—for example, using short-term or output-based subcontracts for software development or customer-facing services. These subcomponents can support iterative improvement without altering the core PPP framework.

Regions of Use

• Widely used outside the United States

Performance Assurance

• Detailed contractual outcomes, service-level metrics
• Penalties or revenue-sharing based on performance

Vendor Lock-in

• Very high—difficult to change providers midstream
• Needs strong governance and exit plans

Agile Suitability

• Generally poor—rigid structure; exceptions possible via modular subcontracts

3. Rate Contracts

Description:

A Rate Contract is a procurement tool used primarily for recurring purchases of standardized commodities or services, where a centralized agency negotiates and publishes agreed prices and terms with multiple vendors in advance. These contracts do not commit to a fixed quantity of orders but establish a catalog of pre-approved prices that various government or institutional buyers can use as needed over a given period.

Widely practiced in countries such as India, Bangladesh, and across South Asia, rate contracts are commonly used by public procurement authorities to obtain frequently used items like office supplies, IT hardware, fuel, pharmaceuticals, or maintenance services. The key goal is to reduce administrative overhead, ensure price consistency, and streamline procurement for multiple agencies operating under a single umbrella.

Under a rate contract, vendors are selected through a competitive bidding process and agree to supply goods or services at specified rates for a defined duration—often one or two years. However, no actual purchase occurs until an individual agency places an order, known as a call-off or supply order. The ordering agency is responsible for managing the execution of the order, including receipt, inspection, delivery acceptance, and payment.

In terms of performance assurance, rate contracts generally rely on the oversight of the ordering agency at the time of execution rather than including elaborate service-level enforcement mechanisms in the contract itself. There may be limited use of SLAs or penalties for non-performance unless these are explicitly included at the order level. While this keeps the process lean and flexible, it also places more responsibility on individual departments to monitor quality and compliance with contract terms.

One of the advantages of rate contracts is their low tendency toward vendor lock-in. Since multiple vendors are usually empaneled under a single rate contract, the buyer can choose among approved suppliers for each purchase based on availability, delivery timelines, or performance history. This competitive dynamic continues even after the rate contract is awarded, preserving market responsiveness and buyer leverage.

Agile suitability for rate contracts is moderate. While they are not designed for complex, evolving projects, they can be adapted to procure agile consulting services, support roles, or pre-defined deliverables in modular fashion. For example, a government department might use a rate contract to engage agile teams for short-term technical assistance, sprint reviews, or iterative service improvements without issuing a full procurement for each engagement.

In summary, Rate Contracts provide a simple and efficient means for public agencies to procure frequently needed goods and services at stable prices. They offer cost control, procurement speed, and vendor flexibility, though they rely heavily on the capabilities of individual agencies to monitor delivery quality and contract adherence. Their adaptability to agile or modern delivery methods depends on how well they are structured and integrated with internal project governance.

Regions of Use:

• India
• Bangladesh
• South Asia

Performance Assurance:

• Ensured by ordering agency during execution
• May lack robust SLA mechanisms

Vendor Lock-in:

• Low—agencies choose among multiple suppliers

Agile Suitability:

• Moderate—can be adapted for agile consulting or support services

4. Time and Materials (T&M)

Description:

Time and Materials (T&M) contracts are a widely used procurement method in the technology sector that allow buyers to pay vendors based on the actual time spent and materials used to complete a project. Rather than committing to a fixed scope or cost up front, T&M contracts provide flexibility to accommodate evolving requirements, making them particularly suitable for complex or innovative technology projects where outcomes and effort cannot be precisely predicted at the outset.

Under a T&M arrangement, labor is billed at predefined hourly or daily rates, and expenses for equipment, licenses, or other project-related materials are reimbursed as incurred. This model allows government agencies and private-sector organizations to engage contractors quickly and adjust priorities or resources as the work progresses. It is especially useful in environments where requirements are likely to shift in response to user feedback, policy changes, or emerging technical constraints.

T&M contracts are used extensively around the world, including in the United States, the European Union, the United Kingdom, India, and Canada. In each of these regions, the basic structure remains consistent, though local regulations may impose specific oversight, labor rate ceilings, or approval requirements. These contracts are often employed for software development, systems integration, cybersecurity operations, and consulting services where the buyer prefers to retain control over project direction without the rigidity of a fixed-price agreement.

To ensure performance and accountability, T&M contracts typically require close tracking of labor hours, deliverables, and project milestones. Vendors submit timesheets and expense reports that must be reviewed and approved by the buyer. Many contracts also include spending caps, which limit total costs unless formally amended, or checkpoint reviews at regular intervals. These mechanisms help prevent cost overruns and keep the project aligned with strategic goals, even as the scope evolves.

One potential drawback of T&M contracts is the risk of vendor lock-in, particularly if the vendor becomes deeply familiar with the project’s operations, systems, and organizational context. This type of institutional knowledge can make it difficult for another vendor to step in without significant ramp-up time. To mitigate this risk, well-structured T&M contracts often include knowledge transfer provisions, requiring the vendor to document work clearly, train internal staff, or prepare transition plans that enable handoffs to new providers or in-house teams.

T&M contracts are especially well-suited to agile project management methodologies, which rely on iterative cycles, constant feedback, and flexible planning. In agile development, requirements often evolve based on real-world testing and user engagement, and T&M contracts allow teams to adapt without the need to renegotiate the overall agreement. This makes the T&M model ideal for sprint-based development, prototyping, and pilot deployments where the focus is on progress and responsiveness rather than strict adherence to a fixed deliverable.

Regions of Use

• Widely used globally

Performance Assurance

• Requires tight oversight and time tracking
• Often capped or milestone-billed

Vendor Lock-in

• High if vendor accumulates system knowledge or uses proprietary tools
• Reduced by knowledge transfer clauses

Agile Suitability

• Excellent fit—ideal for evolving, iterative agile work

5. Fixed-Price Contracts (Firm-Fixed Price or FFP)

Description: Fixed-price contracts are one of the most common forms of technology procurement around the world. Under this model, a buyer agrees to pay a vendor a predetermined, lump-sum amount for delivering a specific set of outcomes, regardless of how much time or effort the vendor ultimately spends. These contracts are typically used when the scope of work is well understood and can be precisely defined in advance, making them ideal for clearly bounded projects with measurable deliverables.

This contract type is a global standard, widely used in the United States, the European Union, the United Kingdom, Canada, India, and many other regions. Public-sector agencies often rely on fixed-price agreements to control costs and simplify budget planning. The appeal is straightforward: the buyer pays for results, not effort. As a result, these contracts can provide strong incentives for vendors to deliver efficiently and within schedule, since cost overruns are the vendor’s responsibility.

To ensure accountability and performance under fixed-price arrangements, contracts typically include milestones, delivery-based payment schedules, and penalties for non-performance. Each phase of work may trigger a partial payment only after the agreed-upon deliverables are accepted. Additionally, contracts usually specify technical and functional requirements in detail, making performance obligations enforceable through clearly defined acceptance criteria.

While fixed-price contracts offer budget certainty, they can also present challenges. One concern is vendor lock-in, which may occur if the project depends on proprietary deliverables, such as custom code, closed systems, or undocumented workflows. In contrast, when projects are modular, and outputs are developed using open standards and transparent documentation, the risk of being locked into a particular vendor is significantly reduced. Buyers are advised to structure fixed-price contracts in ways that encourage openness and portability, especially for long-term sustainability.

In the context of agile development methodologies, fixed-price contracts are generally less suitable, as they tend to constrain flexibility. Agile approaches emphasize adaptability, iterative progress, and frequent feedback loops, which often conflict with the rigidity of a fixed-scope, fixed-cost contract. That said, some organizations have adapted the model by breaking work into smaller modular components, each with its own fixed price and outcome—allowing for more agile-friendly execution. This approach works best when individual features or work packages can be clearly specified without locking down the entire project scope in advance.

Regions of Use

• Global standard

Performance Assurance

• Based on milestones or deliverables
• Strong contractual enforcement

Vendor Lock-in

• Low with well-defined, portable outputs
• Higher if tied to proprietary tech

Agile Suitability

• Poor fit unless broken into small, iterative contracts
• Inhibits scope flexibility

6. Cost-Reimbursement Contracts (Cost-Plus)

Description: Cost-reimbursement contracts are a flexible contracting method in which the vendor is repaid for all allowable project costs, plus an additional fee that may be fixed or performance-based. This approach shifts more financial risk to the buyer but enables work to proceed even when exact costs or outcomes cannot be predicted in advance. As a result, cost-reimbursement contracts are particularly well suited for uncertain, complex, or high-risk projects, such as research and development (R&D), exploratory engineering, and innovation-focused initiatives.

These contracts are commonly used in the United States, especially in federal government procurement by agencies such as the Department of Defense, NASA, and the Department of Energy. Internationally, similar models appear in EU innovation programs, publicly funded R&D projects, and collaborative scientific efforts across Canada, the UK, and other countries. Wherever the emphasis is on discovery, experimentation, or developing new capabilities rather than delivering predefined outputs, cost-reimbursement contracts provide the structure needed to support progress.

Under a cost-reimbursement agreement, the buyer agrees to cover all reasonable, allowable, and allocable costs incurred by the vendor in carrying out the work. These may include labor, equipment, travel, materials, and overhead. To ensure accountability, contracts often require detailed cost reporting, justification for expenditures, and frequent progress reviews. In some cases, award fees or performance incentives are included to encourage efficiency, innovation, or alignment with broader program goals.

Because the vendor is embedded deeply in the project and often contributes to the development of critical knowledge or intellectual property (IP), these contracts can carry a high risk of vendor lock-in—particularly in long-term engagements or projects where the vendor generates proprietary tools, designs, or datasets. To mitigate this, smart contracting practices include IP-sharing clauses, technology transition requirements, and obligations to produce documentation and training materials that facilitate knowledge transfer.

In terms of project methodology, cost-reimbursement contracts are well aligned with agile and exploratory development practices, particularly in early-stage efforts where discovery and change are expected. Agile teams often begin with incomplete information, refine plans iteratively, and pivot based on learning—making fixed scopes and prices impractical. Cost-reimbursement structures allow teams to explore alternatives, prototype ideas, and engage stakeholders continuously without the constraints of predefined cost limits or deliverables.

That said, the flexibility of cost-reimbursement comes with a trade-off in financial oversight. Buyers must invest in robust auditing, financial controls, and vendor monitoring to avoid inefficiency or abuse. This often requires experienced contract managers and careful negotiation of allowable costs and performance expectations.

Regions of Use

• Common in U.S. federal contracts (esp. DOD)
• Used in EU innovation projects, public R&D globally

Performance Assurance

• Requires audits and cost justification
• May include performance incentives

Vendor Lock-in

• High due to IP dependency or accumulated knowledge
• Mitigated with IP clauses and transition plans

Agile Suitability

• Good for R&D and early agile stages
• Less suited for scaled delivery

7. Multiple Award Schedules (MAS)

Description: Multiple Award Schedules (MAS)—also known as GSA Schedules in the United States—are long-term government-wide contracts that pre-qualify a pool of vendors to provide products or services at negotiated prices, terms, and conditions. These schedules are maintained by the General Services Administration (GSA) and are widely used by U.S. federal, state, and local government agencies to streamline purchasing without conducting a separate, full-scale procurement process each time.

Under this model, vendors apply to be included on a schedule through a rigorous vetting process. Once awarded, their offerings—including pricing, labor categories, and contract terms—are published in a centralized catalog. Government buyers can then place orders directly against the schedule, choosing from among multiple pre-approved vendors who provide similar goods or services.

Each agency-issued order—commonly called a task order or delivery order—can be customized with specific deliverables, milestones, and service level agreements (SLAs). This structure provides a flexible mechanism for acquiring both commodities and complex services, ranging from IT support and cloud computing to training, logistics, and management consulting.

In terms of performance assurance, MAS contracts allow agencies to define expectations clearly at the order level. SLAs, quality standards, and delivery milestones can be embedded in each task order, while vendors are also subject to annual performance reviews and compliance monitoring. This provides a dual layer of oversight: both centralized by GSA and decentralized through individual agency evaluations.

Vendor lock-in is typically low under MAS contracts. Because multiple vendors are awarded schedule access for each category of service or product, agencies can easily switch between suppliers as needed. This keeps competition alive throughout the contract's lifecycle and allows buyers to respond to changing requirements, vendor performance issues, or budget constraints with minimal disruption.

The MAS structure also performs well under agile project methodologies. Agencies can issue modular task orders for each sprint or development phase, enabling iterative progress without needing to define all requirements upfront. This is particularly helpful in software development, digital transformation, and system integration projects, where scope and priorities often evolve in real time. The built-in flexibility of MAS supports rolling-wave planning and adaptive delivery.

Overall, Multiple Award Schedules offer a powerful and efficient way for governments to reduce procurement time and risk, expand vendor choice, and support evolving project needs, including those that follow agile methods. Their widespread adoption and centralized governance help ensure transparency, performance accountability, and procurement consistency across agencies.

Regions of Use

• Common in U.S. (GSA Schedule)
• Used in UK and EU (Framework Agreements)
• Australia (Panel Contracts)
• India and South Asia (Government e-Marketplace GeM)

Performance Assurance

• Each order may include deliverables and SLAs
• Performance can be reviewed annually

Vendor Lock-in

• Low if multiple vendors are on schedule
• Easy vendor switching supports flexibility

Agile Suitability:

• Works well with modular agile projects
• Supports iterative contracting

8. Innovation Partnerships

Description

Innovation Partnerships are a specialized procurement approach designed to support the co-development of new solutions through a phased contract that combines research and development (R&D) with subsequent procurement. Rather than separating innovation funding from acquisition, Innovation Partnerships allow a public authority to enter into a single, integrated process where it collaborates with one or more vendors to create and ultimately purchase a product, service, or system that does not yet exist on the market.

This model is formalized under the European Union’s Directive 2014/24/EU, which provides a legal framework for public buyers to partner with companies on innovative efforts that serve public needs. While originally developed in the EU, similar structures have occasionally been adopted or adapted in other jurisdictions, particularly in areas like healthcare technology, sustainable infrastructure, and digital government platforms.

The structure of an Innovation Partnership is explicitly divided into phases. It typically begins with a competitive selection of vendors capable of undertaking the required R&D, followed by clearly defined development milestones or “progress gates.” At each gate, the public buyer evaluates results and determines whether to continue funding further phases of the innovation effort. If the developed solution meets the intended needs, the final phase results in procurement of the finished product or service, without the need for a new tendering process.

To assure performance throughout the contract, these partnerships include criteria for advancement, such as demonstration of technical feasibility, achievement of user-centered goals, or compliance with cost and timeline projections. By using phase-based continuation conditions, the buyer maintains control over both progress and risk, ensuring that only promising and useful developments are carried forward to deployment.

Vendor lock-in is a known concern in Innovation Partnerships, as the buyer and vendor often co-develop intellectual property or deeply integrated systems during the early stages of the project. However, this risk is typically managed contractually through well-structured agreements on intellectual property ownership, licensing rights, and re-use terms, which may allow the public buyer to share or reassign the resulting technology if needed.

When viewed through the lens of agile delivery, Innovation Partnerships align exceptionally well. Their iterative structure, emphasis on continuous learning, and integration of end-user feedback all mirror core agile principles. The ability to experiment, adjust course, and progressively build a usable product makes this contract type ideal for projects where requirements evolve based on discovery and stakeholder input.

Regions of Use:

• EU (Directive 2014/24/EU)
• Occasionally adapted elsewhere

Performance Assurance:

• Divided into R&D and procurement phases
• Progress gates with continuation criteria

Vendor Lock-in:

• Moderate to high due to co-developed solutions
• Contractually managed through IP and licensing terms

Agile Suitability:

• Excellent—aligns with agile’s iterative, user-centered nature

9. Competitive Dialogue / Two-Stage Bidding=

Description

Competitive Dialogue—also known as Two-Stage Bidding, is a public procurement method designed for situations where the buyer’s needs are complex or not fully defined at the outset. It allows government agencies or public entities to engage directly with shortlisted vendors through a structured dialogue phase before receiving final proposals. This process is especially useful for acquiring bespoke technology solutions, infrastructure systems, or innovative services that require tailored planning and collaborative design.

This contracting model is widely used across the United Kingdom, European Union, South Africa, and Australia, particularly in projects involving high-value procurements, major system integration, or public-private service delivery. It is best suited for scenarios where the public authority has a general idea of the outcomes it wants but needs vendor input to shape the technical, legal, or financial framework of the solution.

The process typically unfolds in two distinct stages. In the first, qualified bidders are invited to participate in interactive discussions with the buyer. These conversations focus on refining the scope, addressing feasibility, exploring delivery models, and identifying risks. This dialogue helps clarify requirements and ensures that potential solutions are both technically sound and commercially viable. Once this exploratory phase concludes, all vendors are invited to submit final, binding proposals based on the mutually shaped understanding.

Performance assurance is built into the final contract through tailored service-level agreements (SLAs), milestones, and delivery metrics that reflect the refined understanding reached during the dialogue phase. Because expectations are collaboratively developed, the resulting contracts tend to be clearer, more realistic, and better aligned with project goals—leading to higher performance and reduced risk of disputes or failure.

The risk of vendor lock-in in this model is relatively low. The dialogue process fosters competitive tension among multiple vendors and enables the buyer to precisely define specifications, helping to avoid vague or overly customized outcomes that would limit future flexibility. Moreover, by clarifying the scope early and comparing vendor approaches, the buyer can make more informed, defensible decisions.

From an agile project management perspective, Competitive Dialogue is highly compatible. It facilitates early stakeholder engagement, incremental clarification of needs, and adaptive planning—core tenets of agile thinking. Although the formal procurement phases may appear linear, the open, iterative nature of the dialogue stage supports flexibility and user-centered design, which is essential for agile-friendly contracting.

In essence, Competitive Dialogue provides a balance between open market competition and collaborative problem-solving. It enables public buyers to achieve better outcomes when the solution space is uncertain, the stakes are high, or the innovation required is substantial. By combining consultation with competition, this model helps governments procure more intelligent, responsive, and effective technology and service solutions.

Regions of Use

• UK
• EU
• South Africa
• Australia

Performance Assurance

• Final contracts include tailored performance metrics
• Requirements clarified collaboratively

Vendor Lock-in

• Low—competitive tension is high
• Helps refine scope to prevent overdependence

Agile Suitability

• Very suitable—enables early stakeholder engagement and flexible scope

10. Managed Services Agreement (MSA)

Description: A Managed Service Agreement (MSA) is a contractual arrangement in which a vendor assumes ongoing operational responsibility for delivering a specific service or function—most commonly in areas such as IT operations, infrastructure hosting, network monitoring, cybersecurity, or data management. Under this model, the client delegates the day-to-day management of services to a third party while retaining strategic oversight.

This form of contracting is widely used in the United States, United Kingdom, European Union, Australia, and Canada, especially in contexts where governments or large organizations seek to reduce internal workload, enhance service reliability, or access external technical expertise. MSAs are frequently employed in both public and private sectors to manage stable, predictable service environments over multi-year periods.

The core feature of an MSA is the transfer of responsibility for operational outcomes to the vendor. To ensure performance accountability, the contract typically includes detailed Service Level Agreements (SLAs) that define minimum acceptable standards for uptime, incident response times, data integrity, and user satisfaction. These SLAs are often backed by financial incentives or penalties to reward high performance or address lapses. In more mature agreements, customer satisfaction surveys and user feedback loops are also built in as performance indicators.

However, MSAs carry a significant risk of vendor lock-in, particularly when the vendor uses proprietary platforms, customized tools, or undocumented processes. Over time, the service provider may accumulate institutional knowledge and technical dependencies that make transitioning to a new provider difficult and costly. To mitigate these risks, public sector clients increasingly incorporate exit clauses, open standards requirements, and transition assistance into MSA contracts. These provisions aim to ensure that services can be migrated to another vendor or brought in-house if needed, without undue disruption.

In terms of agile compatibility, Managed Service Agreements are generally less suited to agile development or dynamic, evolving projects. MSAs are designed for steady-state operations where predictability and consistency are prioritized over flexibility or iteration. While a vendor might incorporate agile practices within their internal service improvement cycles, the contractual framework itself does not typically support rapid prototyping, frequent changes in direction, or modular scope adjustments—features that are essential for agile software development or innovation-focused initiatives.

That said, MSAs can play a complementary role in agile environments by providing reliable infrastructure or baseline operational services upon which agile teams can build. For example, a managed cloud service or helpdesk operation can offer stable support while a separate agile project team iterates on application features or data analytics capabilities.

Regions of Use

• Widely used Globally

Performance Assurance

• SLAs, uptime, response time, customer satisfaction
• Incentives and penalties for metrics

Vendor Lock-in

• High—especially if proprietary platforms are used
• Mitigated by requiring open standards and exit support

Agile Suitability

• Limited—suited to steady-state operations, not iterative development

Summary Table

International Contract Types Compared

Contract Type	Region	Agile Fit	Performance Assurance	Vendor Lock-in Risk	Notes
IDIQ	US, UK, EU, Canada, Australia	Good (multi-award best)	Per task order, SLAs	Moderate
PPP / P3	Global	Poor	Detailed outcomes	High	Long-term, infra-heavy
Rate Contracts	India, South Asia	Moderate	Rely on the oversight	Low	Useful for commodity tech services
T&M	Widely used globally	Excellent	Time tracking, oversight	High
Fixed-Price (FFP)	Global standard	Poor	Milestones, penalties	Low-Moderate
Cost-Reimbursement	US, EU	Good (early stage)	Audits, reporting	High
MAS	Global	Good	Per order	Low-Moderate
Innovation Partnership	EU	Excellent	Progress gates	Moderate	Built for co-development
Competitive Dialogue	UK, EU	Very Good	Tailored performance metrics	Low	Supports design-phase iteration
Managed Services	Global	Poor-Fair	SLAs, penalties	High

Other International Contract Types in Technology Procurement

1. Framework Agreements (EU, UK, Australia, Canada)

Description: Similar to U.S. BPAs or Standing Offers, these agreements establish terms with one or more suppliers over a period, allowing government entities to place specific orders (call-offs).

Countries: EU Member States, UK (Crown Commercial Service), Canada, Australia

Performance Assurance:

• Managed at call-off stage
• KPIs and SLAs often embedded in call-offs

Vendor Lock-in:

• Low if multiple vendors are eligible
• Higher in single-supplier frameworks

Agile Suitability:

• Strong, especially if call-offs support modular/agile delivery

2. Public-Private Partnerships (PPP or P3)

Description: Long-term contracts where private entities design, build, finance, and operate technology services or infrastructure.

Countries: Canada, UK, EU, India, South Africa

Performance Assurance:

• Strong contractual enforcement
• Linked to service availability and outcome delivery

Vendor Lock-in:

• High, due to long terms and infrastructure ownership

• Exit strategies often complex and costly

Agile Suitability:

• Poor for agile delivery unless modular sub-contracts are used

3. Innovation Partnership Contracts (EU Directive 2014/24/EU)

Description: A procurement process that allows for R&D and eventual purchase in a single framework, aimed at buying products/services that do not yet exist.

Countries:

• Countries under EU procurement rules

Performance Assurance:

• Based on agreed development phases and deliverables

• Includes checkpoints for continuation or termination

Vendor Lock-in:

• Moderate to high due to co-developed IP and custom solutions

Agile Suitability:

• Excellent—supports iterative development and collaborative R&D

4. Two-Stage Open or Competitive Dialogue (EU, UK)

Description: Procurement where buyers first engage in structured discussions with bidders to define needs, then invite refined proposals.

Countries:

• EU
• UK
• South Africa
• Australia

Performance Assurance:

• Based on final contracts post-dialogue
• Aligns deliverables with refined, better-scoped requirements

Vendor Lock-in:

• Low to moderate
• Tends to result in better-scoped, more competitive contracts

Agile Suitability:

• Very suitable—encourages flexible requirements definition and co-design

5. Rate Contracts (India and other South Asian countries)

Description: Pre-negotiated pricing and terms for goods and services, often managed by a central procurement agency (e.g., GeM in India).

Countries:

• India
• Bangladesh
• Sri Lanka

Performance Assurance:

• At the ordering agency's discretion
• May lack rigorous monitoring if centrally managed

Vendor Lock-in:

• Low—government agencies can choose from multiple suppliers

Agile Suitability:

• Moderate—usable for agile support services, but limited in flexibility

Summary of Key International Additions

International Contract Types Compared

Contract Type	Region	Agile Fit	Lock-in Risk	Notes
Framework Agreement	UK, EU, Canada	Good	Low–Moderate	Similar to U.S. BPA/IDIQ
PPP / P3	Global	Poor	High	Long-term, infra-heavy
Innovation Partnership	EU	Excellent	Moderate	Built for co-development
Competitive Dialogue	UK, EU	Very Good	Low	Supports design-phase iteration
Rate Contracts	India, South Asia	Moderate	Low	Useful for commodity tech services