Also a factor was that Boeing had very deep pockets and was both willing and able to make a low-ball bid on a firm fixed price contract.
IMHO - Boeing used the gillette razor blade marketing method. Give the basic unit at ' cost' or ' less' and make make your money on the replacement ( blades ), in this case the multi year modiication, srework, impovement, repair, etc - to go on for the next 50 years or so .