The bid is fixed. Ultimately, that means that the price is fixed. There is much more leeway in terms of time, and even more in terms of scope.

You have to realize that the customer will almost always ask for some kind of changes mid-way through. Once they’ve agreed to change scope, then “all bets are off”.

I didn’t quite understand what you were trying to say. The topic of this post is “Successfully Applying Agile to Fixed-Bid Projects” but it sounds like you are suggesting that the customer must understand that fixed price isn’t reasonable and do the project with variable scope. Thus it’s not fixed price/time/scope anymore.

You’re absolutely right that the traditional approach to fixed-pricing is filled with problems. However, I like to believe that deliberate low bids are not the only (or best) answer. For instance, there are options like two-stage contracts to delay final commitment until both parties are better informed. I briefly blogged about the options here, http://www.agilekiwi.com/estimation_and_competition.htm, in a post about the problems caused by fixed-pricing.