> If the government buys Mercedes cars it doesn't demand Mercedes to hand over the engineering designs for the cars.

> In fact in the entire military and intelligence space I don't even think this is practically possible due to secrecy and avoiding to give away software that is vital to national security.

The military is likely a case where the government does demand the engineering designs, production lines etc.

Open source doesn't have to mean public source, it means the user has access to the source and can modify the program if they want to. Seems like a perfectly reasonable approach for military or intelligence procurement.