You could have contracted 5 small firms for £400k each (which, for this project seems frankly seems excessive) and even if a couple failed to deliver you'd have gotten 3 separate products to choose the best quality one from, £148k to legally chase up the firms who failed to deliver, and still had £2 million left over.

I agree a good solution isn't easy to come up with, but the status quo is certainly an outrageously awful one.