Safeware
I'd like a better understanding of the risks they were taking.
Agreed. They were, and still are, guaranteed work. Potential, and perfectly viable, competitors are actively prevented/discouraged from bidding.
Think about this. As DERA (or QQ), they are tasked to conduct research. They issue a report which forms the basis of an MoD decision to proceed to Development. MoD goes through the motions and issues an Invitation to Tender. Other bidders ask for the report to better inform their bids and establish parity with what is now QQ. MoD refuses. QQ use their knowledge of the report and what recommendations the MoD have accepted and, vitally, rejected. That is, not only do they have sole access to almost all the MoD’s corporate knowledge archive, but they know where to focus their bid because they know what MoD rejected. Other bidders have to spread their resources and their bid is less focussed. The bid marking is almost a formality, perhaps helped by the fact DSTL are employed to do the marking, and know which side their bread is buttered on (and who makes the tea as they often share the same office with their QQ counterpart). And we all know why companies don't complain.
All this, and more, would have been known by these multi-millionaires. They have some superb people and expertise (few of whom benefited financially), but it’s not a level playing field and there is no point pretending it is. I just can’t see the risk.