That's a good point. The law can have an exception for communities that get less than 5 bids. If that happens the gov't builds the infrastructure.
Profitability should be automatically part of the bid. It doesn't mean the bidders pay the government, it could be the other way around too.
Except that the gov't picks and pays for the contract (construction), instead of the local residents.
For service and maintenance contract the gov't would subsidize the monthly fees (which are expected to bee higher than a high density city)