[nvm0n1]

Isn't military work mostly done by private contractors? It's not like the USAF actually owns and operates its own plane factories.

Some companies do approximate market operations internally, any company that has a notion of internal billing or where teams talk about internal customers is to some extent like this.

Companies not using market principles internally isn't a strike against markets, if you believe Coase's theory of the firm i.e. companies form at the break even point on transaction costs