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I work for the federal Government, and I would just like to say that this is false. We do not go with the lowest bidder on many occasions. In fact, here are some actual documents on the subject:
description of best value process - https://acc.dau.mil/CommunityB...
acquisition regulation mandating best value - https://acc.dau.mil/CommunityB...
Federal Acquisition Regulations indicating best value - http://www.acquisition.gov/far...

If your company does business with the federal government, then FAR might be skewing the numbers.

Direct expenses, including non-recurring material costs, can be billed direct (i.e., to the contract) whereas marketing costs are by definition indirect (cannot be billed to contracts but do count towards overhead, G&A, etc.).

This means that a lot of "non-labor engineering expenses" could be hidden from that ratio due to the fact that they're billed to the customers.

The old system was retired on November 21, 2012, so I'd guess the flaw was there from the start.
http://www.acquisition.gov/SAM_Guides/index.html

ASFOC will make one decision, AMC another and the ANG another, and they never cooperate, costing tax payers millions.

In theory (i.e., the Federal Acquisition Regulations), they're supposed to. But the links in the story do make it look like a direct acquisition through the operational command, and not through an Air Force Materiel Command acquisition agency. I guess the cost of even thousands of overpriced iPads isn't enough money to warrant that.

(2) The Contractor shall have, to the extent permission is granted in accordance with paragraph (c)(1) of this clause, the right to assert claim to copyright subsisting in data first produced in the performance of this contract.

Its not unusual for the Government to allow a contractor to assert copyright, as long as the Government itself has unlimited rights. It really depends on whether the the Government, in the form of the contracting officer, gave permission to the contractor. The Government only keeps contract records for about 6 years 6 months (except in special cases), so depending on how old the particualar work is, the only conclusive record (i.e. a permission letter from the Gov't) may be in the hands of the contractor. Other contemporaneous proof would likely be if the work was registered with the Copyright office when produced, which would lead one to beleive that permission was granted at that time. If no registration was made contemporanously, then likely (but not conclusively) no permission was given and there would be more credence to the idea that they are claiming copyright without permission.