10 U.S.C. § 3605 (ARMED FORCES)
§ 3605. Authority to acquire consumption-based solutions
(a) Authority.—
The Secretary of Defense and the Secretaries of the military departments may acquire services through consumption-based solutions.
(b) Guidance Required.—
The Secretary of Defense shall amend the Department of Defense Supplement to the Federal Acquisition Regulation to implement the authority under subsection (a), including creating a new subcategory of services under part 237 of the Department of Defense Supplement to the Federal Acquisition Regulation, entitled “Consumption-based solutions”, that—
(1) is any combination of hardware, equipment, software, labor, or services that together provides a seamless capability;
(2) has the ability to be metered and billed based on actual usage;
(3) has predetermined pricing at fixed-price units;
(4) requires the awardee to notify the Department of Defense contracting officer when consumption under the contract reaches 75 percent and 90 percent of the funded amount, respectively, of the contract; and
(5) treats modifications to a contract entered into under the authority established in subsection (a) to add new features or capabilities in an amount less than or equal to 25 percent of the total value of such contract, as originally awarded, as procurements made using competitive procedures for the purposes of chapter 221 of this title.
(c) Funding.—
Amounts authorized to be appropriated for acquisitions using the authority under subsection (a)—
(1) may be used for expenses for—
(A) research, development, test and evaluation;
(B) procurement;
(C) production;
(D) modification; and
(E) operation and maintenance; and
(2) may be used to enter into incrementally funded contracts or other agreements, including advanced payments.
(d) Consumption-based Solution Defined.—
In this section, the term “consumption-based solution” means a model under which a service is provided to the Department of Defense and may utilize any combination of software, hardware or equipment, data, and labor or services that provides a capability that is metered and billed based on actual usage at fixed-price units.
(e) Rule of Construction.—
Nothing in this section shall be construed to prohibit the use of the authority created under this section in combination with another contract type provided for under the Department of Defense Supplement to the Federal Acquisition Regulation.
(Added Pub. L. 119–60, div. A, title XVIII, § 1825, Dec. 18, 2025, 139 Stat. 1248.)
heading: Statutory Notes and Related Subsidiaries
heading: Pilot Program on the Use of Consumption-Based Solutions To Address Software-Intensive Warfighting Capability
text: Pub. L. 116–283, div. A, title VIII, § 834, Jan. 1, 2021, 134 Stat. 3754, provided that:
“(a) In General.—
Subject to the availability of appropriations, the Secretary of Defense is authorized to establish a pilot program to explore the use of consumption-based solutions to address software-intensive warfighting capability.
“(b) Selection of Initiatives.—
Each Secretary of a military department and each commander of a combatant command with acquisition authority shall propose for selection by the Secretary of Defense for the pilot program at least one and not more than three initiatives that are well-suited to explore consumption-based solutions, to include addressing software-intensive warfighting capability. The initiatives may be new or existing programs of record, and may include applications that—
“(1) rapidly analyze sensor data;
“(2) secure warfighter networks, including multilevel security;
“(3) swiftly transport information across various networks and network modalities;
“(4) enable joint all-domain operational concepts, including in a contested environment; or
“(5) advance military capabilities and effectiveness.
“(c) Requirements.—
A contract or other agreement for consumption-based solutions entered into under the pilot program shall require—
“(1) the effectiveness of the solution to be measurable at regular intervals customary for the type of solution provided under contract or other agreement; and
“(2) that the awardee notify the Secretary of Defense when consumption under the contract or other agreement reaches 75 percent and 90 percent of the funded amount, respectively, of the contract or other agreement.
“(d) Exemption.—
A modification to a contract or other agreement entered into under this section to add new features or capabilities in an amount less than or equal to 25 percent of the total value of such contract or other agreement shall be exempt from the requirements of full and open competition (as defined in section 2302 of title 10, United States Code [see 10 U.S.C. 3011]).
“(e) Duration.—
The duration of a contract or other agreement entered into under this section may not exceed three years.
“(f) Monitoring and Evaluation of Pilot Program.—
The Director of Cost Assessment and Program Evaluation shall continuously monitor and evaluate the pilot program, including by collecting data on cost, schedule, and performance from the program office, the user community, and the awardees involved in the program.
“(g) Reports.—
“(1) Initial report.—
Not later than May 15, 2021, the Secretary of Defense shall submit to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] a report on initiatives selected for the pilot program, roles, and responsibilities for implementing the program, and the monitoring and evaluation approach that will be used for the program.
“(2) Progress report.—
Not later than October 15, 2021, the Secretary of Defense shall submit to the congressional defense committees a report on the progress of the initiatives selected for the pilot program.
“(3) Final report.—
Not later than 3 years after the date of the enactment of this Act [Jan. 1, 2021], the Secretary of Defense shall submit to the congressional defense committees a report on the cost, schedule, and performance outcomes of the initiatives carried out under the pilot program. The report shall also include lessons learned about the use of consumption-based solutions for software-intensive capabilities and any recommendations for statutory or regulatory changes to facilitate the use of such solutions.
“(h) Consumption-based Solution Defined.—
In this section, the term ‘consumption-based solution’ means any combination of software, hardware or equipment, and labor or services that provides a seamless capability that is metered and billed based on actual usage and predetermined pricing per resource unit, and includes the ability to rapidly scale capacity up or down.”