And regarding the conflict of interest issue, YC user zacharycohn, who says he works for 18F, wrote "As a government organization, not a private company, we can't respond to RFPs. No one is really sure where this claim that we help write and then respond to rfps comes from, but it's not true."
I don't see where the conflict of interest would come anyway even if 18F was bidding on contracts. If I ask a plumber for an estimate to fix my sink, and then decide to do the job myself, I don't see anything unethical there. The plumber might not like that I'm capable of doing the work myself, but there's nothing wrong with it. I could see a problem if the 18F staff stood to receive massive raises or bonuses if they decided to reject a vendor's bid and do the job themselves. But I don't think that's the way it works for government employees. At least not government employees at that level. The higher ups do make a good profit on campaign contributions or outright bribes. And that's why the software industry lobbyists will be listened to.