I read recently on a pprune thread, I can't remember which, that companies routinely put their prices up by 200-300% on MOD contracts.
To be fair Biggus, that's just commercial pragmatism and it's the same throughout the Western world in all industry sectors.
Commercial companies exist for one purpose alone - to make a profit. Dealing with large bureaucratic organisations, especially governments, massively increases overhead, so prices must cover that. Otherwise commercial companies will just walk away. It's kinda day one at business school - trade at a loss, go busto.
I worked for 18 months at one of the biggest MOD software subcontractors and was good friends with one guy on the sales team (who was ex FJ btw). He told me the golden rule - if the profit margin is not 30%, we walk away.
You can hold all the competitions you wish; no solid company will take on a project at a loss, without a damn good reason (and there is almost never a reason big enough).
Matter of interest, in my current occupation there is a whole host of government schemes we can get involved with, with a ton of customers open to us.
We won't touch any of it with a barge pole. Why not? Tons and tons of paperwork, we are required to do for FA reward.
**** that!
Same principle applies.