[raesene9]

For the sake of debate, lets assume an equal level of incompetence between contractor run projects and government run projects.

In that case at least

a) There's no need to pay extra for the profit margins of the contractor companies (and the inevitable sub-contractors they use)

and

b) The incentives of the people doing the work are likely to be closer to the original project, in that the people doing the work are in the same organization as the project.

For me, outsourcing makes sense if the organization doesn't have enough of the specific type of work to have a fully staffed internal team, so specialist services, or if they are obliged to get an external opinion (e.g. auditing/pen testing). Otherwise you're just adding more layers of profit seeking middle-people...

[eru]

Profit is a small part of costs. See https://slatestarcodex.com/2017/02/09/considerations-on-cost...

I'm not so sure about incentives. The incentives aren't necessarily great in either situation. See also https://en.wikipedia.org/wiki/Public_choice

[jvanderbot]

"Overhead" is a large part of costs, and profit is often contractually limited in government contracts. But much of the profit is hidden in the markup, which can sometimes be 50%, meaning you pay $1.50 for $1.00 of supplies, labor, etc.

[jvanderbot]

To add to this, the gov requires that all the markup is broken out, so it can be audited. I think usually contractors are allowed things like R&D budgets, salary (maybe not bonuses?) etc. I'd love someone more knowledgeable than I am to chime in.

[eru]

Yes, though government departments also have overhead.