I hate this basic assumption that privatization will lead to cost reduction unless proven otherwise. Cost reduction is a question of optimization of process combined with requirements for quality. You can either make what you're doing more efficient or reduce the quality. The military can be extremely efficient when it wants to, so I'm not surprised at all that when outsourced to the private sector, costs didn't go down. There was probably just no room to optimize given the existing requirements, and then private companies had to make a profit, so quality had to go down.