From the post, it really seems like this was an experiment - and they seemed to have learned a fair bit from it. I'm not sure I'd take this single $1 result and say that'll be typical in the future.
I agree that $1 can be strange, and some can perceive it as unfair. But there are a lot of business models, where the goal is to get a foot in the door, before monetizing in the future (freemium comes to mind). And if it financially doesn't make sense, I'm doubtful that at scale everyone will be bidding $1 and providing great code.
Hopefully, though, the system won't make it hard for smaller development firms, which may struggle most with concessionary pricing.
I think the main problem is that while the pr is fantastic, with doing this for free (actually worse than free, the single dollar incurs the overhead of payment, taxes etc - without actually providing any of the benefits of payment) - they've not successfully tried out making a commercial market place. They've found a way to solicit free work.
While certainly interesting in its own right (how can we get random people to contribute solid open source modules to government IT projects?) - this isn't actually a success for growing a marketplace where contractors can participate and make money from these projects. Unless they can figure out something to fix the pricing. Perhaps having 10.000 such projects available would lead to most of them having a more real competition for "for profit" bids. Or maybe it would just turn into some kind of Amazon Turk dystopia with desperate people contributing code that takes much more time evaluating than it would take to write a proper solution.
I'm really exited this went so well (They did it; the winning bid provided a great solution) -- it will be interesting to see where this ends up going (and how they plan on handling support and project management as/if this model picks up steam).
I agree that $1 can be strange, and some can perceive it as unfair. But there are a lot of business models, where the goal is to get a foot in the door, before monetizing in the future (freemium comes to mind). And if it financially doesn't make sense, I'm doubtful that at scale everyone will be bidding $1 and providing great code.
Hopefully, though, the system won't make it hard for smaller development firms, which may struggle most with concessionary pricing.