The problem here would not seem to be the outsourcing, but the single-sourcing. That's entirely on the purchaser; whether they single-source it from a single private contractor or a single-source internal government provider isn't going to change anything, the problem is you need multiple sources.

A large purchaser may well have to go out of their way to ensure that too. No good having three sources for your gunpowder if they're all pulling the raw materials from the same single point of failure.