This is ludicrous indeed. I simply cannot comprehend how such a situation is at all possible. I write code, I read the tech specs, go do some business-y stuff when needed.
Project goes over budget? The client doesn't ever mind that, 'cause the amount was already agreed upon. If the budget was 10 million, that's what you're getting, minus tax and handling plus any possible interest for delayed payment on the client's part.
Project went over budget? Start coming up with a good way of telling your employees they'll be working unpaid overtime. Project over budget? Suck it up, the client will NOT PAY A DIME MORE. If you underestimated the scope of the project (by an order of magnitude) it may be prudent to cancel the contract and pay the agreed upon contract termination fee - usually a few times the payment upon completion.
Project goes over time though? Well lop off, say, 10% of the agreed upon sum with each month of delay, up to a neat 200% loss, after which it automatically terminates.
Of course, you may attempt to go to court - on one side is the local judge, an employee of the system you, as the judge surmises, tried to screw over, and at the opposite end is your company. The worst case scenario for the government is when they slap on some ludicrous fine and the company does some legalese sorcery, changes the name and the office - but I'm pretty sure IBM is too big for that.
So based on my experience it's very rare for the government to end up with the short end of the stick. How is this even possible? Did some secretary in Queensland just sign a contract that an IBM guy gave to her?