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> Then when the whole thing falls apart it ends up in the courts and the court then decides who promised what based on those original contract documents.

Something government contractors learn to be good at is following a spec. These lawsuits often end-up costing the taxpayer a fortune for the government to be told that everything was delivered according to their spec.

The consulting company will then recoup it's losses from the lawsuit using their hourly billing clause where it stipulates that they can modify the software for X$/hour.