In the European Union, governments are legally required to open public works and supplying contracts to competition through an open tendering process. I'm surprised that this doesn't happen in the US. There's a fair bit of criticism levelled against the EU tendering processes, though. Many feel that the process emphasizes price at the expense of quality, resulting in a "race to the bottom" as another poster mentioned…
You can also go here and see contracts already awarded (search for "iphone" for instance): http://www.usaspending.gov/
The US allows "no bid" or "sole source" contracts, which have several problems, not the least of which is rampant cronyism. Note that even the President failed to stop this gravy train: http://www.politifact.com/truth-o-meter/promises/obameter/pr...
Also, you'd be surprised on how many hours get billed visiting the stakeholders for "face time" and to ensure follow-on work.