Designing a guideline for selecting a supplier for an agile fixed budget & resource contract in the public sector

A classic contract for IS between a supplier and a public sector institution based on a requirements specification is well suited for a stable situation. However, if you have to accept many changes or have ambiguous requirements then you may end up with “endless” re-negotiation of the requirements; you need a more flexible way to develop IS. A new way of coping with many changes is to use an agile development approach and a fixed budget and resources contract. Thus instead of specifying requirements for functionality you specify requirements for resources; capabilities for the team and the technical support structure. This paper presents a case where that was done. We analyse the case using the iron triangle for projects as our theoretical lens and design a guideline for how to implement a fixed budget and resources contract in the public sector. The guideline includes elements to cope with challenges in a tender process such as transparency, criteria for supplier selection, and live assessment of resource skills and capabilities, as well as achieving the flexibility for change needed.