Billing daily and not tracking time doesn't make lazy contractors less likely to be inefficient. If anything, it gives them more opportunity to obscure what they're doing.
The only model that really eliminates the perverse incentive to be inefficient is project-based billing.
Just break the project out by week (or by day if it's short) and provide a "total project price" line, and then a clause saying you'll charge overages at a pro-rata day rate. Of course, you can decide whether or not to actually charge OT; if you're OT because of something you did wrong, you're best off not charging, while if the client did something flagrantly wrong, like not kick off the project until 2/3rds of the ostensibly billable time was over, you're well within your rights to do so.
This stuff isn't hard, and I've been a little confused for, like, about 17 years as to how message boards manage to make it seem complicated.
If this is news to you, and you start doing it yourself (you should; it's easy, aligns incentives, and will probably make you more money) you have to credit me, but also cite the whole Apostolic succession (Matasano, @stake, CATP, ..., Paul Revere) I just did.
But jokes aside one of my friends seen this kind of setting degrade to "our lawyers will talk to your lawyers about this change request" on every piece of communication between client and big software consulting company.