Gov. contracts can work well. I had one where I had to plan a quite tricky job, ie do the risk reduction, break it down into tasks, provide guidance and structure the work. My estimate was about 1000 hours - for them to do it in-house.
A few months later out of the blue, they offered me the whole job - they had some loose contractor funds they needed to spend. I felt a bit guilty signing up to 1000 hours - the estimate was for *them* to do it, not me - so I negotiated an 'early completion bonus' based on half the remaining hours. When I came in at about 700 hours (+150 hours bonus), they still had the equivalent of 150 hours left, so they used that for another contract - with me. A commercial client would have just pocketed the difference.
Andrew