Kundra will have budgetary authority to launch entirely new systems within government departments, or kill existing multimillion-dollar IT projects. His decisions could have a large impact on government contractors, such as SAIC and Booz Allen Hamilton, that have come to provide the bulk of IT services to agencies.
D.C. Tech Chief Tapped for White House Slot
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR2009030501060.html
Because private business that compete through contracts could provide better service, at lower cost, than federal workers, of course. You're exactly right this new CIO will try to grow the federal workforce instead, Obama already announced it for the IRS:
IRS dumps private debt collectors, shifts pendulum
WASHINGTON (AP) -- So much for privatizing the federal government. The Internal Revenue Service's decision this week to quit using debt collectors to dun delinquent taxpayers was celebrated by public employee unions as a pendulum shift after watching the Bush administration often opt for private contractors over federal workers to deliver government services.