More Peer/Public review of contracts and project specs you say?
Dear god WHY. That's half the trouble with Govt procurement and contract management these days. You get a bunch of jumped-up Jobsworth's trying to satisfy their own political agendas. And then you end up with a whole bunch of conflicting requirements, that you then have to try to pair down to something doable (within the time frame and budget). But then one or more people who've had input in the requirements gathering process whinge because their precious requirement has been de-scoped. Scope creep is an endemic problem, and it's very difficult to manage once it gets out of control.
Sorry. Rant over. But the point being, you actually want less people involved. But those people have to know what they're talking about.
Same goes if you're writing a piece of bespoke software under the umbrella of an overarching 'IT Provision and Support' type contract - it makes sense to ignore 80% of what the TDAs and Managers want, and actually speak to the people who will be using the blasted thing.
One other thing. I work for one of those 'multinational companies'. We don't have interns or foreign outsourcers, because - surprise surprise - most of the Govt-related contracts and projects require the staff to be security cleared. And that goes for almost company involved in Govt IT contracts.
Aside from that, agree completely. More IT is good, both int erms of efficiency in Government departments, and public sector jobs in the companies that take them on. By all means cap the per hour charges. But PLEASE make sure you've got the right people in there in the first place, and you won't have any problems.