> There's no real way to prevent it other than subsidizing them, and then how is that really better than the government running the entire thing?
It is no better for you, ordinary citizen. It is better for the company who enjoys both aspects of independence and government work.
In a perfect world no private company would want to work with government, because the government would want to get the maximum benefit for the least price possible and take precedence over whatever issues you have with that.
Private companies lining up to get work from governments means "corruption" or "deep crisis", none of which is very good.