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There are many reasons they use contractors. Here are some of the reasons:

1) The agency in question has a hard cap on the number of employees, but has more work than it can accomplish with just this allowed staff. Contractors are the only option.

2) The government is building something and doesn't need (or thinks it doesn't need) to keep the experts around afterwords. For instance, you're building a bridge and won't need all of the construction workers when it's finished.

3) To get around the broken hiring process

4) To get around the broken union rules

5) To theoretically save money vs. doing it in house

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