As someone who loves agile working, this frustrates me.
"[This approach] probably takes longer to deliver the benefits" is exactly the opposite of what agile is meant to do. The whole point of agile is that it delivers benefit sooner, rather than waiting for the whole solution to be defined and ready. And as such the overall benefit is both sooner and greater.
What they really mean is they didn't understand what their MVP looked like.
And agile normally means that the scope is the negotiable bit. Time is often locked to regular releases etc. Resource is normally fixed too. Therefore scope within each interval is negotiable. Only, in this project I bet it isn't. Scope will be fixed, resources will be relatively fixed, which means budget needs to be flexible.
If the scope is fixed, and can't be delivered iteratively, then is agile really the right approach? Or do they mean they are now going to try and do something just so they don't look like a complete and utter screw-up. Looks like an agile scapegoat to me.