There are a few answers to that but the most obvious reason is quality of work. You can expect a lot more out of a contractor whose billed rate is $250 an hour versus a grad student. The second point is that least in the United States, all government jobs are purely clerical and administrative. The government, as you know it does nothing for itself, except may be law-enforcement. Contractors do everything. Space flight, building the roads, managing construction programs, hauling trash, everything. In this particular case there are “national security“ interests that have inserted themselves into the healthcare domain who want the data and to control treatment. You don’t get to say no to people who with unlimited resources and a “by any means necessary” MO.