Maybe that’s different in your neck of the woods. From my experience, the government contracts can be lucrative because the towing fees are paid by the motorists, not the government. The government just gives one towing company the exclusive authority to respond to crashes and breakdowns on specific segments of roadway. If you tow a car off the road, the motorist must either pay up front to have it towed to their destination of choice or must pay the bill before the car can be removed from the tow yard.
I agree with your view.
It’s like the old days when city politicians would take huge bribes to make a cable tv company the only one available in a locale.
Here, in most states and local municipalities they have a “Rotation List”. As long as you meet the requirements, keep your equipment safety tested, and contract to only charge the rates they set, they cannot discriminate and everything comes up on a “rotation call list”. They rotate calls as per next on the list. When they get to the bottom of the list it starts through again.
But here is the problem. Many times it is costing you more than it is worth because the car (most are abandoned) is not worth what it cost you to go tow it and impound it. To get on the list you have to provide the impound lot. And if the owner never comes to get it you are stuck with a loss for all your efforts. And this can be upwards of 30% or more of all your “Rotation calls” from them.
In the meantime, You might miss a cash customer while you were wasting time fulfilling your rotation contract for the authorities. So it is more often than not a huge combined loss between both getting stuck with a worthless car, and what you lost and could have made from a paying customer elsewhere. And the price of scrap metal just never does cover these losses.