There is usually very little in a contract language for what happens when they get blown off, so the person with the broken Humvee (as an example) has to contact the appropriate government entity (contracting officer) to contact the company rep. So the company gets a slap on the hand. The government can threaten to end the contract, but that is a nuclear option.
The biggest (realistic) stick the government can have is to threaten to not renew a contract, but when you talk about a Humvee (to continue the example), that sadly is totally unrealistic. So the contractor knows they have a monopoly and have no incentive to work harder.
I'll tell you a story on a very large program I was on. We did developmental testing for a very large platform (Billions of dollars). We had a prime (Company A) who gave specifications for a form factor to Company B. For months, we told Company A that the Line Replaceable unit (LRU) that goes into the platform would not fit, and it took us eight months for Company A to admit there was even a problem. We only got them to admit there was a problem because we literally had a general officer come out to the test site and try to fit in the LRU himself.
What ended up being the issue? Company A gave the wrong size specifications to Company B. Guess what happened? The government had to pay to retrofit the design so the LRU would fit. We simply had no stick to make them pay for their mistake. The company said if they had to pay for it, they wouldn't have enough money for the rest of testing. And also guess what? no one in the government wants to be in charge of a failed program.