In-house staff aren't a panacea, but in-housing critical capabilities has always been the prudent decision.
Of course, much the same can be said about contractors and off-shoring in the private sector as well.
At this point, the US is cannibalizing its future for short-term gains. Of course, the people making the decisions generally won't bear the costs, and have convinced much of the populace that such a strategy will benefit them through wishes and pixie dust.
Here's a nice write-up on the bribery and abuses of just one:
http://www.vanityfair.com/news/2007/03/spyagency200703
The others pull the same shit. The biggest trick is the revolving door of moving people back and forth into the private sector with them benefiting while taxpayers lose.
https://www.opensecrets.org/revolving/
And note before any counterpoint that a non-corrupt system might pay better wages in the event you're right. Most of the wages are rigged to go up and to bullshit that benefits people I'm describing. That could easily go to better tech. For instance, the first time the private market started doing strong security was a small initiative by the U.S. government mandating it with purchases promised in return. Led to the strongest systems of the time that resisted NSA pentesting. Although NSA killed that (incompetence or malice), it could be done again with a different group.
http://lukemuehlhauser.com/wp-content/uploads/Bell-Looking-B...
Most people who got into gov. gigs know this but the upside always been a cushy retirement, sweet pension and a Cadillac health care plan in retirement.
"Unfunded government liabilities" are now always on the chopping block and those people that took those low paying jobs for a better long term payout in the end are now getting screwed, royally. Government jobs are no longer the sweet gig people think they are and I think they have to start being more competitive with the larger markets.
- a lot of bureaucracy
- and the mandatory ass-licking
- working on ancient platforms and techs
- and a lot less pay compared to the market (so either you do under the table deals, or well..)
Very few tier one engineers go for Govt jobs and almost no tier one engineers from tier one college go for the Govt jobs.
Top it wtih maddeningly absurd and archaic interview process and selection criteria.