If I was a manufacturer I’d demand a premium for this, not give a discount.
That's probably why you aren't a manufacturer and I assume, don't own or operate any large manufacturing business. Large quantity contracts are a gold mine for these companies. Let's say you are going to make 100 million widgets. You can sell 100 million widgets, 100 at a time to 1 million customers at .10c each or would you sell all 100 million at one time at .09c (even if the customer doesn't take delivery of the order for but 10% of them, as long as they pay). Selling to 100 customers is an exponential increase in the costs associated with that process, sales, accounting, shipping, warehousing, etc. A single customer reduces the expenses in those areas drastically. I can't think of a single industry that doesn't give a decent discount for bulk orders specifically for this reason. A discount on the cost results in a much greater expense savings.
And don't forget, you are dealing with the government who probably isn't getting a whole lot of a discount and is probably paying up front for supplies they don't even take delivery on. They are that dumb.