[tomrod]

The mindset for acquisition is typically anything not core to an agency's mission should be bought on the open market at the lowest price technically acceptable. This tends to select against small businesses who can provide stellar services but can't just cut rates willy nilly for extended delivery time periods.

In effect, government contracting is a large jobs program.

[bluGill]

Government often goes too far. You should outsource not things that are not your core values, but things you cannot trust someone else to do. Maintenance often needs to be something you do in house because you cannot trust someone else to take care of it. That someone in house will of course outsource the labor (toilet clogged once - the in house person uses a plunger - if that toilet clogs often they call a plumber to fix what is wrong), but you need someone in house to decide if you need to hire the labor in the first place, otherwise you end up paying a plumber to replace a toilet that works fine but got too much put into it one time.

[nxobject]

Not to mention the friction that getting a contractor who barely knows your jurisdiction does, or the contract and fiscal bureaucracy involved.