The Type 1 heavy is mostly competing with the similar strength and cost standard covariant as a cost saving measure (it is, in fairness, slightly cheaper, edit: and leaves the possibility of refitting to a large Covariant later) but yes, it is definitely the third-place penny-pinching option.
As mentioned, I believe that we both can and should take the large Covariants, but a standard Covariant is definitely my preferred compromise pick, given the practically negligable extra cost in the long run.