Perhaps they do. There are good and bad aspects to doing projects both ways.
I worked on one project that the US Army was trying to do in house, and for 5 years, this project was "6 months from completion."
The technical folks were really no better or worse than in the private sector, so it wasn't a matter of technical ability. It was management, scope creep of the project. It was a joint services project, so getting "buy in" from all the branches was tough. The Everyone wanted something added themselves, which kept expanding the scope and scale of the program.
Our company came in with two other contractors, working in a collaboration with one another, and using the work that had been done. Our programmers, again, no better or worse than the GS programmers. But the management was better. That combined with a price tag associated with every change did a great job at eliminating all but a trickle of changes to the project. Because now changes required a change to the statement of work in the contract with the associated additional costs.
When this was being done by all GS folks, there was little or no consideration given to how these changes added time and labor costs to the project.
So in 12-18 months, the thing was completed, largely because the private contractor made it more difficult to add on to the scale and scope of the project.
So I can see an argument both ways. I'm sure we got paid more than our GS counter parts. However, by completing the project in a shorter period of time, the total cost may have been less, than allowing it to continue in the US Army/GS system.
I think the value provided by contracting things out is in this aspect, fixing the scale and scope and ultimately cost of the project.
If the government wants changes, they usually cost more money.
Is that to say that contractors don't miss deadlines and ask for more money? Nope not at all. I've seen contractors "fired" for failing to meet the contract. I don't know what happens to the money in cases like these. I would hope our government protects itself against contractors who fail to deliver as promised.