My experience at a federal contractor suggested the main cost was probably due to lack of communication. Due government clients (sensibly) not trusting the contractor, there are extreme efforts at oversight, and that makes the people at the lowest levels cynical, because they're just ordinary people trying to do a decent job and the management slightly above them seems to see their mission as preventing any information from passing to/from their clients because it equates to risk. A government employee could waste 2/3 of their time and still get more done because of the cost of coordinating with others when you're external.