Wait a second. Government over-spending is beyond reproach when the money is channeled to what are likely politically-connected private firms? To my mind, that is equally egregious, perhaps even moreso because of the taint of cronyism (or still worse than that, regulatory capture by entrenched large firms).

But even if I give the firm-selection process the benefit of the doubt and assume it was done without kick-backs or regulatory capture effects of any sort (seems implausible, but we'll go with that), private firms simply know that when you are bidding on government work, the budget is enormous. You're probably likely to be kicked out of the running for being un-serious if your bid is significantly less than the average bid. And the average bid is high because ... government.

I can imagine feedback of the flavor: "You think you can do this type of complex web application for a mere fifty million? Don't waste my time."

I'll admit that I was skeptical when people said that "everything is different this time because ... internet!", but I think your application of the theory is much more elegant.

The other thing is that although the government is using private contractors, that does not mean the latter are solely to blame. If the government ends up paying millions of dollars for a wordpress site sporting a $40 theme, the contractors charging for it may be immoral, but the government who awarded them the job is at best massively incompetent.

Read the linked document instead of just relying on Greenspun's numbers. The $327m number he cites appears to be incorrect.

...for $327 million the government purchased a computer program unable to determine that $80,000 is more than $15,856.

Is there some sophisticated interpretation that finds this not to be a risible failure? If so, you could have provided that, as it actually would have been responsive to TFA. Don't allow what TFA actually says to get in the way of a good pro-government bashing!

Oh yea - in India too.