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."