After becoming familiar with the reality of the cost inflation of (in my case local government real estate) development projects vs private I chalked it up to graft, incentives, and mismanagement.
Actually your comment is probably more correct - adds a whole step to move the wallet. Misaligned incentives and mismanagement are probably more equal across public/private than we like to believe
I'm being a little bit facetious. When the government actually owns/operates the labor or equipment they can do a lot more. In the prison example state COs are certainly better than rent-a-cops.
It's just unfortunate that's how most administrators work. The traditional debate about public vs private usually focuses on different tradeoffs and incentives of the public - but if they are just paying market vendors it's greatly diminished.