SAFe Managed-Investment Contract

In the first article of this series on agile contracts, we dove into the basics and evolution of contracts in software development. We talked about why it’s essential to adopt contract practices that encourage agility across the whole value stream. We also emphasized the importance of transforming the client-supplier relationship into dynamic partnerships that focus on maximizing value delivery. Plus, we looked at how software contracting approaches have evolved and the challenges of adapting traditional contracts to agile contexts, especially when it comes to flexibility and risk-sharing.

We wrapped up the previous article by introducing the SAFe Managed-Investment Contract, designed to balance risks and engage parties while keeping flexibility. Now, in this article, we’re going to share our deployment experiences and some handy tips for implementing agile contracts. We’ll walk you through a model we’ve successfully used multiple times in both the private and public sectors. Keep in mind, you’ll probably need to tweak it to fit your specific situation.

Implementing an agile contract helps tackle several major challenges we often see in supplier agreements:

Optimizing value delivery and controlling costs
Reducing decision-making delays
Adapting to changes
Equitably sharing risks between the client and supplier
Avoiding rigid and inappropriate contractual frameworks

These are common hurdles for project managers, but the SAFe Managed-Investment Contract offers innovative and effective solutions.

Implementing an Agile Contract with SAFe

Implementing a first agile contract is primarily a team effort that requires close collaboration among various stakeholders. The team is formed around the existing contractual governance. It typically includes key figures such as Enterprise architects, Business Owners, a subject matter expert related to the contract, procurement, and a representative from the legal department.

This team is not a new decision-making committee but a collaborative agile team that can work in concert with the LACE or the VMO. Its objective is to design the best agile contract tailored to the specific context of the company and its suppliers.

Here are the team’s main responsibilities:

Identifying needs and requirements, and establishing the timeline for the call for tenders
Integrating agile governance into the overall contracting strategy
Identifying the legal elements necessary for the execution of the Agile contract
Communicating the call for tenders, facilitating workshops, drafting the contract, and selecting the supplier

The Key Stages of the Agile Contract

We’ve broken down the implementation of an agile contract into four stages:

Pre-commitment
Contract Definition
Contract Execution
Contract Closure

Pre-commitment

This stage covers everything leading up to the selection and engagement with the chosen supplier. It starts with a traditional call for tenders where the client defines the mission, scope, and commercial and legal framework.

After reviewing proposals, shortlisted suppliers are invited to individual workshops to:

Clarify the product vision
Discuss the desired Minimum Viable Product
Explore the agile methodology to be used for work execution
Validate the contract’s economic framework

These workshops aim to build mutual trust and assess the suppliers’ ability to meet all the clauses related to the methodology, which is crucial for choosing a collaboration partner.

If the context allows, there might be a negotiation phase. Suppliers can adjust and resubmit their offers based on the information gathered during the workshop.

The final selection of the supplier considers traditional criteria like cost, quality, and the supplier’s ability to deliver the solution, but also how well they can collaborate and adapt to the agile methodologies.

Contract Definition

Once the supplier is chosen, it’s time to agree on and sign the contract.