It's absurd really. Massive pressure to pick the cheapest bid, then very slowly discover that the cheapest option can't actually do a reasonable job in a reasonable timeframe, then some years later try again with the same cheapest must win premise. It's kind of optimising for cost but poorly and with no feedback loop.
There is a feedback loop. Under a firm fixed price contract, the vendor has to eat any cost overruns. Contacts can include bonuses for finishing ahead of schedule, or penalties for being late. And there are administrative procedures for barring vendors who fail to deliver as promised from bidding on future contracts.
There are second order effects on those, though. Fixed price contracts incentivize contractors to cut corners to make up for cost overruns or to pad their profits (doubly so if it’s a contractor who underbid to win the contract). Unless you’re willing to pay for a lot of govt oversight, many of those won’t be noticed until the contract is long complete. Even if noticed, you need an organization willing to engage in that legal fight.
The administrative controls are lagging indicators at best, and administrative controls are usually one of the least preferable control mechanisms.
