If they are that much cheaper then someone somewhere is cutting corners.
Not necessarily. If the bar to entry is high enough, and the task small enough then outsourcing makes great sense. As described above - worldwide delivery. Not feasible to be done by every company individually.
A contentious example around these parts - cloud computing. If I need a small server to do my own stuff, and it needs to be permanently available on a fast internet line, it's generally better / cheaper for me to grab a VPS from (say) Rackspace than to buy a 1U Proliant (with hot-swap RAID, redundant PSUs etc) and colo it in an ISP datacentre. And even moreso over getting a RIPE allocation, multiple lines into my premises with BGP coming out of my ears, generator out back, and a second server handy in case the first one falls over...
For a telco, this system should be easy to set up. It should be well within their normal excess capacity, so it makes sense for a telco to handle it on behalf of the government rather than the government spending my tax money trying to *be* a telco. Why a telco then subbed it, though, is beyond me.