Corporate rent seeking would seem to be a more prevalent example, even in the context of government. For example, most of the US defense budget goes directly to the military industrial media complex instead of the uniformed military.
Source? I would be surprised if the highest category of military spend was not healthcare (including VA) plus salaries (including DB pensions) plus benefits, which is all payroll expense to employees.
https://www.cbo.gov/publication/59475 https://www.cbo.gov/publication/59511
Even if it were true (which it isn't), most of the money that goes to contractors also goes to salaries.