That is indeed curious accounting. The USACE charges other fed agencies 47% overhead. Some DoI agencies charge each other 41%. USDA is about 40% interagency overhead.

I wonder if we're talking about the same thing?

For example, a work order from USACE will have the full cost accounting of the project and at the bottom line you'll see an additional 47% charge for administrative costs and then the final cost to the customer.

Maybe what you're reporting is that the final (cost + overhead) = 1% less than equivalent private sector bid for work with the gov.

I can believe that. If I were a civilian entity I'd sure as hell bid high for a gov contract. Not just because they have deep pockets but because of all of the crap the gov makes contractors tack-on to meet some feel-good gov committee standard.

But I guess I'm cynical due to experience on both sides of that fence. It's a sausage factory.