Government entities would need to do the same thing. But I've worked for government before. Its very departmental, little to no competition. Jobs are created to get tasks done and when these jobs are designed, you can see that there's supposed to be some wiggle room as to how talented or hardworking the person hired has to be to be order to get the job done. I saw people simply chatting for the longest time. Lots of people have lots of spare time!!! Organization has overhead costs!! Naturally, that happens with businesses too, but businesses compete with one another. This is good for the same reason that government getting into the private sector is bad: the government has vast resources and doesn't like it when the things it creates collapses for financial reasons. Much easier to quietly raise taxes or allocate more money to a failing thing then to have accountability for who the heck thought it was a good idea yes?
What you said regarding distributed systems got right down to it. And when you add a new department to government, it seems to me that you necessarily have overhead. The government now has another thing to have oversight of. The government does not have oversight of businesses to the same degree; they let businesses make their own decision. I guess its like a living creature. There's an ideal size for any given creature depending on how it gets food and such. Elephants require strange structures just to stay alive (their ears vent heat?) I don't know how to explain this except by example.
For a long time in computer making, I always wanted to go with a custom builder. They provided greater adaptability (easier to upgrade at a time when the hardware advances were actually important to how a computer "felt" when you used it) when they sold you a computer for about the same price. But nowadays, they can't compete with $500 computers from Dell. Dell has a size advantage. That size advantage undoubtedly comes with extra overhead costs in terms of communication and accountability.
But the government is much, much bigger than Dell......and I bet we have a pretty small government compared to a purely socialist or communist government.
Just some loosely bound thoughts.