You are correct, and that was actually my first thought. If you win (1st, 2nd, or 3rd place), they have rights to your game and the right to make their own derivative works. And you have rights to make derivative works. But then I thought of how this could play out.
So you make "UltraCiv" for the competition and win. You decide that it was a good idea and decide to expand on it. You make "UltraCiv: Election Paradox". Now you have something successful. They make "UltraCiv: City Manager". You can't stop them, because you already gave them permanent rights. They claim that they only use it for "educational use", which is 100% true, since it is an educational game. So was Oregon Trail. In this case, however, your franchise is tainted.
It's just poisioning your own well and IP.
Again, someone will win $20k, but that someone won't be me. I'll put my efforts elsewhere.
The reason government is trying to get outside developers creating this game is that they don't have the talent for that, nor are they in the business of creating games in general. They would probably not have a program for continued improvement of games provided by 3rd parties.
Whoever wins the competition however is a talented creative developer. If government wanted to develop the game further they would probably be happy to contract with the original developer if they have further budget for that. But if not, you the creative developer could create your own follow-up game which government could not copy without your permission.
I think the winner will be somebody who is already developing games. They have the process and tools in place already. It won't be me (either).
So you make "UltraCiv" for the competition and win. You decide that it was a good idea and decide to expand on it. You make "UltraCiv: Election Paradox". Now you have something successful. They make "UltraCiv: City Manager". You can't stop them, because you already gave them permanent rights. They claim that they only use it for "educational use", which is 100% true, since it is an educational game. So was Oregon Trail. In this case, however, your franchise is tainted.
It's just poisioning your own well and IP.
Again, someone will win $20k, but that someone won't be me. I'll put my efforts elsewhere.