I think the whole grants thing is an attempt to cover up the truth:

FOSS has no market value.

It's free because it's worthless because it has no scarcity. Only FOSS that hasn't yet been built has value, but how do you accurately judge the worth of something that doesn't yet exist?

You don't.

You judge the person who is offering to build it and you gamble on them. Which means that your judgement is only by proxy, and nepotism and misallocation of capital will be rife. The bigger the lump of capital spent on one person, and the more awarded at once, the larger the misallocation possible.