I agree, I think its pretty good of Cisco to offer this, especially since it does appear as if they did nothing wrong.
Its kinda like saying you won an ebay auction and later realized you paid 2x more then you could have bought it new, or more to this case, realized after winning the auction that you bought the top of the line model and could have been ok buying the economy model. Not the sellers fault here, its the buyers.
Ive worked under contract for the Canadian gov and its the same way, they send you a list of work to be done and you bid on it the entire project as is or not at all. You cant submit a bid that has changes to the project. Sometimes the specifications of the job are done in house or sometimes they are contracted out. But once the specifications are written and sent to tender, they cant be changed. especially by the bidder.
So basically this isnt a failure at Cisco, this is either a failure of the gov doing their own in house assessment of their needs, or if it was farmed out, then that company failed the gov when writing the specifications of the project.
In my experience the most f*cked up projects seem to come about then the project specifications requirements gathering is farmed out. Man I did some weird projects that took a massive amount of time just todo the simplest task.