When I worked for a GEC company the standard methodology for MoD contracts was:
1. Nail down the requirements - never underestimate the value of the legal team.
2. Cut costs to win the contract.
3. Develop rigidly to spec, even though you know it's not going to work and it's not what they want - it's what they asked for, resulting in...
4. Sell them consultancy telling them what they should have asked for in the first place.
5. Here's the money. Each and every change to the requirements results in a Change Request - which must be costed to include coding, documentation, test and debug and integration costs.
TLDR:
You undercut your competitors to win the contract and make your money on change requests.