The government is concerned with the shape of the society it represents as well as the end result. Accepting some inefficiency for social good is a feature, not a bug. Even when it makes you mad.

And, as described numerous times elsewhere in this thread, it's not that hard for small companies to get governmental work. But the process is different, for reasons that are not themselves unreasonable, and most don't really want to play with stuff like FAR. (Which is part of why many large governmental contracts require subcontracting to small companies--itself but the most efficient process, but a good one for growing those small companies.)