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The government doesn't do anything at market rates. They employ below market rates, and contract external companies above market rates. This is (unfortunately) by design.

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For what its worth, government jobs are also a bit more secure and generally provide pensions and other benefits.

Whether those benefits are worth a decreased salary depends on the individual.

Unfortunately, the pensions are largely gone the way of life 401(k)s, and with the furloughs that have been coming due to Congressional instability, those things are not really that true anymore.

Why do you say "by design"? Whose design?

A certain group of politicians want to replace all government functions with private contractors, and most of those are captured by various lobbying groups representing said contractors.

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