Earlier quoted context omitted.
Years back a friend of mine's startup failed when USAF pirated their software and the original customer org stopped paying for it. Feds are DMCA immune, so no real recourse.
This seems very suspect. Usually you do have recourse via procurement channels and reps. If you file a complaint with that agency stating that they’re using a license without paying for it, it will result in at least an investigation.
I wouldn't. I'd hire some Peter Gibbons type, who only does about 15 minutes of real, actual work in a typical week. Then I'd tell them they can finish early if all their pending cases are closed.