For some reason the government isn't willing to pay software developer salaries. It would rather pay a company to pay them instead.

Any network service with 24x7 availability and millions of users requires constant maintenance. Hardware has some lifetime and needs to be maintained and replaced. OS needs patching. Dependencies need security updates and, time to time, migrations to next major LTS update. Sometimes new requirements come from regulatory, that need development of new features. The skill set needs to be maintained. Support requests need to be served. Law enforcement may ask for some data.

Add to this hard digital sovereignty requirements: continuity of service must be guaranteed for decades. All this requires quite a special setup in which commercial entities are rather tolerated than welcomed, but they may still make more sense than a government agency so constrained by budget process that they cannot hire any decent engineer.

Then they'll be in breach of contract. Lots of government contracts have a "no outsourcing" clause.