I have worked on several flexible fixed cost contracts. It’s a more complex contract, but money gets handed out on a per deliverable basis with negotiation occurring during the contract period. They allow some back and forth but require designs to be finalized by the government at specific times.
The issue is it’s hard to scale that up to a multi year 2 billion dollar contract. However, I think individual large scale software projects are inherently a bad idea, which is probably a larger issue.
Eh, the problem is that any such project should be tied to efficiency. And it should be able to ramp up very slowly, and should be cancelable any time. Usually the problem is that these projects run into issues that need escalation, eg. a small change in scope, requirements, specs, budget, structure, milestones. They usually have to start by building bridges to other groups, and there's usually no mechanism to make good incremental agreements, that are needed to facilitate a great systems design. (So in the end a lot of thing hinges on random/arbitrary interpersonal relations and chance.)
Just delivering something for the sake of it leads to atrociously bad public infrastructure, be it software or a stretch of pavement.
The issue is it’s hard to scale that up to a multi year 2 billion dollar contract. However, I think individual large scale software projects are inherently a bad idea, which is probably a larger issue.