Military Information Technology has a really nice article on how DISA(Defense Information Systems Agency) computing services has moved to a utility computing model. They have awarded $1.4 billion in contracts for storage and processing power, in a 'pay for what you use' model.
DISA maintains complete operational control over their data centers, while the six major 'service capacity' contracts provide the horsepower and SAN.
I could go into a lot of the details that are very impressive, but the article does a good job of covering everything. I have always liked the utility computing model (more so, 'grid'), even though it seems to be pretty high on the hype scale. I think this move by DISA just shows ( or will show) the validity of the model and how it can work.
Check out the article here.