I was a manager in the federal government for 10 years (now retired). A few years after GWB took office, I was forced to hire contractors to do the same work my other employees did. My government employees made a decent wage, plus vacation and sick leave, and health insurance. My contract workers who did the exact same work got paid about 40% less with almost no benefits. (I wasn't supposed to know this fact, but one of the contractors came to me and said their company had been withholding money for a 401-k account but hadn't deposited the money in her account for over three months and was angry. She then told me how much she made and what her benefits were. I was shocked).
But, you might say, at least the taxpayers benefited from cheaper labor. When I told my Division Chief about the 401-k and wages paid, etc., he showed me how much we paid the contractor supplying the contract employees and it was almost the same as what our employees cost us (including benefits). Later contracts actually ended up costing more than our employees.
The reason why Republicans love contracting is because it allows private companies to siphon money that should go to the workers into their pockets. It also makes it easier and much cheaper to fire employees or otherwise eliminate jobs. My contract employees had zero rights. They were always at the mercy of their employers.
But my biggest problem with my contract employees, all of whom had at least a B.A., was that their pay was so low that their poverty often impacted their work. They couldn't afford day care, relying on friends or relatives for care, which was unreliable. Some also had to rely on friends or co-workers for rides to and from work which meant they had to scramble whenever their ride was sick or had to leave early, etc. They also came to work sick more often because they couldn't afford a day without pay.
There are situations where contracting is cost efficient, but except for those few exceptions, contracting is just a way the private sector to divert tax dollars into their greedy hands.