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There is a fundamental problem with this process , which leads to project failure more than 75% of times. By Failure I mean failure to meet the project's triple constraints of time, cost and Quality. However, there is a reason for such mode of operation. Government gets fixed budget for projects and they are not allowed to over-spend. Not that overspending is bad but media make a mess, even when there is a genuine spill in project's cost. Media tries to take an angle of corruption leading to cost overrun. This makes it difficult for IT vendors to do projects with government in 3rd world countries. 

Now consider the siutation , 

1. You cannot make assumptions
2. You cannot ask for Change request
3. No extension in timeline , if the delay is due to vendor.
4. Requirements are prepared by some consulting organization not directly taken first hand.
5. No changes to terms and conditions of the contract
6. Stiff competition

Inspite of above you are required to make a bid and complete the project successfully. 

While there are many issues with this model, there are companies who turn over 1 billion to 5 billion per year while doing projects with government. This may not be an issue with first world countries, but I am sure it will have some similar flavor of issues, when it comes to delivering governement projects. 

So what are the best practices to deliver such projects, how can we ensure that we make money even when nothing seems in our favor. In my 6 years association with Goverment projects I have learnt the following.

1. Government people are not Tech Savvy. you must act as a consultant and advisor and provide a simple working solution which meets their needs. Do not over-engineer or gold plate . There is no pleasing of clients here.

2. Bid for projects only when its your core-competency. If you have delivered similar projects in past then you have a good chance to succeed. Even if requirements are at high level and there is a HIGH probablity that it may undergo changes, if you are a domain expert you can expect that cost to fall in a given range. There may be some requirements where your effort would overrun by 30 to 100% but then it may be balanced by some other set of requirements where the client may not want deep functionalties.

3. Solid program management is the key to delivering government projects. Stakeholder management will ensure that you get good support right throughout the project lifecycle.

4. Governance with Steering committee and Ministers will help you understand the softer aspects of the project and what is really needed (beyond what is stated in RFP) to deliver the project. At higher levels within the government you will be able to negotiate and even get Change requests approved. Its all Give and Take and how you can help government look good in front of the media and citizens. 

5. Most government projects would be large and to ensure the risks are properly understood and mitigated you will need some Senior people in each role within your project. Senior people can better understand and visulaize how the project will take couse and what are real risks in the project.

The list can go on, but above 5 are some of the practices which generally work when executing government projects.