Yes, there is a problem, we just can't see it! Sigh.
Every federal government contract that has even a hint of favoritism is litigated to all hell, where lawyers comb through everyone's emails going back years to dig up any dirt they can find. If it was a big problem, we'd know about it.
Nepotism is alive and well at the state and local level. This is partly because state and local governments are far less sophisticated than the federal government in terms of process and people, and also because there is not a strong culture of litigating contracts.