Did you have the rate code in the rate code box when making the reservation? There are times that you have to enter the rate code into the box yourself to get the rate requested. Try making another reservation and make sure the gov't rate code is in the rate code area. Then you can cancel the reservation at the higher rate. Good luck!
You could also have run into a situation where the number of govt rate rooms is sold out for the property. They only have so many that they put aside for that rate usually and once they are gone you either have to call the property and ask for an override or find a different property. When in doubt a nice call to the hotel generally fixes the issue.