This has nothing to do with it. Contractors cost notably more, so if the goal was economizing it’d be an obvious step to cut out the middlemen by hiring staff directly.
The problem is that there’s an entire political ideology holding that government is inherently wasteful and its adherents will oppose any attempt to track market salaries because that allows them both to say they’re saving money at the time and later to cite the struggling/failed project as proof that they were right.