Agreed. If it were my money, I'd encourage candidates to write their proposal themselves because any slop, from an LLM or otherwise, would not even be read in full. And I would encourage them to be more ambitious than in the pre-AI era, and require them to prove they can make good use of AI to reach their goal.
It does not look like a good use of money to mandate human typed code everywhere.
But I would also probably ask for a plan regarding use of resources in general, performance, QA, etc.
I wonder how long before they change their mind.