I was once privvy to the fees that went into contracting - I was a contractor at the time - and I was simply amazed. The government was spending twice my measley salary - half of which I saw go to my paycheck, the other half of which was going to the contracting agency.
Cut out the middle man! Hire more undergraduate and graduate students on a semester or yearly basis. You will receive short-term "contracting" work, but you cut out the unnecessary fees going to a contracting agency. Plus, you would stimulate the job market by giving these students a part-time job/degree fulfillment/job experience. Once they graduated, they would have government AND job experience, and hopefully they would apply to become civil servants, replacing the baby boomers who are retiring in leaps and bounds.