Fixed price contracts may cost the government a lot of time and money but they might still be good insurance against political risk. In WWI many companies that won armament fixed price contracts were able to make large profits, partially leading to a backlash in the interwar years over the idea that the US had been led into WWI by corporate interests leading to US isolationism before WWII. By using mostly cost plus contracts in WWII FDR was able to diffuse the political issue.

I sort of worry that even if SpaceX is able to provide launch services for NASA at a far lower rate than other companies, and that even if their absolute profit s are lower than their competitors they'll still have profit margins so high that it'll lead to backlash given the weak competition.