This rule is to prevent gov't from choosing to simply hire more people instead of contracting to private companies. Without the rule, gov't could hire for much less than it can contract work out.IOW for Parity.
So how does the government paying/remitting 23% tax on service wages (as you and pigdog suggest to be the case)VS private sector paying/remitting 30% tax on service wages solve that potential parity problem again?
The disparity of the rates is 30%. The private sector tax is 30% MORE than the 23% government tax rate you tout, yet you claim it to be for parity.
BTW, what "rule" are you talking about?