...or you could hire contractors when you need to do bulb replacement? Then you have full utilization while you're replacing bulbs, no one is idling on your payroll while you're not, and no one gets pulled from their existing work to do replacement.

That's an option too, but is more complex and less deterministic.

The key assumption is you want low/no downtime. The problem you have is negotiating SLA penalties are difficult to get right for organizations like cities and getting good metrics are tough.

The other thing, especially with government contracting where RFPs are extremely difficult to change after the fact without getting contracts disputed by the losers is that the contractor will add risk premiums for penalties.

... and the external contractor who you're pushing all that risk on will charge you appropriately.

Sure, but they only receive the full amount of the risk you lose if you are their only client. They're still cheaper than either solution I responded to.