I think the biggest problem with Government’s “bad deal” scenario is that the bad deal is about the only deal we can be offered but it is what we have asked for. Unless there are going to be significant treaty amendments (carried out as per national rules e.g. referendums) the EU can’t enter a long term agreement with the UK as a third party.
It can negotiate how we divide up current commitments and set a course for negotiation in the future but the reality, legally, has to be the UK dropping off the cliff. We can refuse to give Parliament a say in this but there aren’t many ways Article 50 negotiations can finish.