Ethics in Government Bidding

So, I know a lot of us have gone through this situation before. A government entity contacts you and says “we need to spend no more than $xxx,xxx on product Y)”

well, the product costs way less than what they have allocated for it.

obviously, you want to make money but selling them that product at that price would be practically robbing them.

when faced with these situations, I always put myself in the position of a taxpayer as well. 

any feedback/criticism/ piggybacking is welcome