What if X wasn't defined to begin, besides a high level of saying "one way or another we'll get you a working result".
Any reasonable firm is hired to map out X to Y as best as possible, or at least be sure they did everything to uncover the possibilities, as much as they may, or may not occur. I have a hard time believing IBM has only experienced this once. I'm not saying IBM would do this, but maybe it happened that certain risks or unknowns didn't get the full attention or support from either side.
Contingencies in contracts are often for when things go to hell, taking up any action or arbitration is still not getting the client the result on top of taking resources away.
Saying we tried when we took a lot of your money isn't exactly a satisfying experience and use of taxpayer dollar. If this had been in the private world, would it have happened as easily?
Your point about competency in procuring digital solutions is a neat one - I don't know of many organizations, be it commercial, government, or academic that are good at this.