Overhead from running your own datacentres is a factor, but (taking this report at face-value) it seems like there will be some modicum of government owned computer resources built. I feel like the cost difference between standing up a small datacentre capable of what they are pitching, versus standing up an over-allocated datacentre is mostly centred on initial 1-time cost. Once things are running, the ongoing cost may not be much different. Even if the government was the only client at a small datacentre, they would still have to have support, maintenance, and management. If they were instead selling over-allocated resources back to the private sector, there would be sales staff, but otherwise the other expenditures would remain nearly the same. They wouldn't even have to be that competitive on anything other than price, functioning much like a utility. Fancy PaaS features can be fully the responsibility of the private sector to develop on top of the true-blue british metal + electrons the government is offering up.