This isn't as cut and dry as you might think. Should the US govt. pay full development cost for all software it contracts out? Contractors often take less NRE than makes sense if they can make a business case for said software elsewhere. If all contracts mean the work will be open source, then NREs will go up dramatically.
Contrast a private software development house with a company that only services government contracts. Why should the second have the benefit of having all the development expenses covered by the tax payer while retaining the same rights as a company that doesn't have those costs covered.
Seems to me that if you fund the development of the product from your own reserves, you have the right to sell to the government like it was any other customer. But if you do it as a work for hire, it's kind of bullshit to get to keep the rights and resell to other parties when possible -- who have already paid the development costs through their taxes.
It would also be a bit skeevy if the government was using tax payer money to develop products that compete with existing off the shelf products. Kind of bad manners to take someone's money and then use that to kill their business too.
