Interesting, Philforest. I am a government employee, and about a year ago, left one position for another in order to maintain my GS status. The place that I had worked is now contracted out, and I have seen first hand that the quality of service is greatly reduced. The employee turnover rate is extreme, and the contractors are managing it poorly.
Some years ago, County services also began to outsource, and once again, I found the services poor, in comparison to when the facilities were county run and staffed.
Also, remember that ValuJet crash? Wasnt the reason for it that ValuJet had been contracting out its maintenance?
I realize those are just a few examples of contracting gone wrong, and I am sure there are contracts that do quite well, I just havent heard of any.