It may be worth noting that some government-sponsored software is intended to get dropped as soon as version 1 gets released. Of course, this is a small fraction of government-produced software.
This happens for a variety of reasons. Often funds are allocated specifically to develop what industry calls a minimum viable product-- with the understanding that if the project is deemed successful, the research group can seek further funding to improve the tool.
There is also a model, in government research funding, that says the government's role is mainly to point the way, or to open up markets. In this model, if version 1 of the software proves itself useful, then an industry partner can step in and it take over. However, if nobody shows interest, then the government should _not_ sustain the effort, because the lack of interest implies a lack of utility to the public.
For example, the OpenEIS project [0] was funded specifically to produce "reference code" that a company can use to check the output of a professional implementation. The reference code is not at all intended to be fast or robust. It's intended to demonstrate the algorithms, and to document the expected output for a variety of reasonable inputs. As a programmer on the project, I knew from the start that my work would end with the first deliverable.
[0] http://eis.lbl.gov/openeis.html