> - government decision making is corrupt/inefficient (they would not pick the best product, only the company that bribed them the most)

That's an strangly simple view. You think playing politics can only mean bribing them?

> government directly funding software development would not suffer from the same issues with government being corrupt/inefficient?

The public sector is not a single unified hivemind. There are multiple different levels of organisation which are each working togeher and fighting each other all at the same time. But a common problem for them all is, the less rules for them exist, the more likely they will make their own descisions.