The big company that bought the small one would simply have claimed that the design was their intellectual property and nobody else could build it.
If I had a government slush fund to develop a low cost ventilator, I would try to structure the payments in the contract to be based on milestones with concrete deliverables. Not a tenuous agreement to buy a bunch of ventilators at below market price (it's implied in the article that the sales to the stockpile wouldn't justify the project for the company).
There's of course a possibility that the government wrote the most aggressive contract they could find someone to work on. But I doubt that is what happened.
Why do you doubt that?
If the big company detests that idea, well, they don't get out of the original contract.
It probably could have been (that would depend on the details of the terms of the original contract), but it wasn't.
It wouldn't necessarily have been trivial for another company to pick the design up and produce it, but it would have been possible.