You have hit the nail on the head I'm afraid. There has to be a date, quality, performance agreed for V1 to go live.
Get an acceptance of a V1 finished product and then they can be happy working on V1.1 or V2
Without this agreement then scope drift will continue forever so the next step is to decide a way forward to get that agreement in place.
Once you have that V1 framework you can then sort out V2 so it doesn't compete with V1 and can be sold as an upgrade if sufficiently different!
Reverse or internal marketing.....!
Failure to set the fixed parameters, agree acceptable deviations is the killer of most government estimates/budgets. MOD suppliers rely on scope creep to provide their profits!
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