At that point, you're just hiring an engineering firm, so there's no real benefit to government doing it.

There is, because your own projects always get a priority. Plus, the institutional history. If the same group of people projected your metro for the last 40 years, they carry a lot of local know-how in their heads.

Having a single buyer gives the government the ability to force standardization across cities, and squeeze contractors. Knowing the US though, it’ll become a jobs program for bumfuck towns like Plattsburgh NY

I'm not sure I see any mechanism through which government would gain those powers. I'm also not sure standardization across cities is a good idea - that sounds good but it would slow innovation in technology.