If he can't do it for the price he says he can go to bankruptcy which would allow him to renegotiate contracts or eliminate unprofitable ones. This option is more appealing to nondiversified businesses. Lockheed really would be irresponsible to offer the same contract. Further lockheed isn't vertically integrated enough to control costs which Musk hints at but doesn't say outright.

I don't think the old government contractor system made long term sense, but it was a great start to space exploration and money "wasted" looks more like invested to me.