Earlier quoted context omitted.
And what are the dynamics that will make this work better, especially recalling the iron law of bureaucracy? http://www.jerrypournelle.com/reports/jerryp/iron.html
One important dynamic is that contracting, due to its slippery nature, attracts the kind of people whose skill is siphoning money away from government while minimizing what they deliver. Think about it: Even contracted physical construction gets screwed up in large scale government projects, and building good contracts about software development is much harder that contracts about physical construction. In-house deve…
And you're not addressing the main issue: projects being way too big and unwieldy (if now somewhat less expensive) even before they go over budget, over time or flatly fails altogether.
If the CGIs of the world actually delivered a functional product on time and on schedule, the fact that they earn handsomely in the process is at best a secondary concern. Next to the cost of the staggering embarrassment that was the failure of the first Obamacare website, whatever CGI quoted is a rounding error.