As a Federal Employee, I take a bit of offense at "Overpaid Public Employees".
As you should. Personally I used it ironically, but it has become part of the popular "free market is better" meme. I have friends and family members who have worked for some level of government and, especially as you go up the management chain, salaries do not seem to keep up with what people could get in the private sector.
It has been the economic fashion over the last few decades to hand over as much work as possible to private partners based on the theory that the private sector is more "competitive" but this is usually bogus as there is no real reason to be efficient when you have your claws on a government contract and the politicians that slipped it to you. Just imagine how much cheaper the invasion of Iraq would have been if all the logistics were through the army rather than through a cost plus friend of certain politicians contractor like KBR? The contractor was hiring away the governments own soldiers to pay them to do the same job they were already doing but for three times the pay but still coming out of the same tax money just so that they could charge a percentage of every dollar spent.
Government contracts are just a way to pay off political supporters with other people's money.
Generally the example of KBR paying high to collect higher is an anomaly and much of the time a private contractor will pay the actual people who do the work less than what the government would pay, but the management structure gets paid much more especially the guys at the very top and the major share holders. Roughly twice to three times the cost is about right across the board.
Now, some things are better left to private industry. Smart phones and game consoles, for example. Other things, like health care, really shouldn't. And when you look at for profit healthcare in the US versus the nearest comparator, Canada you find that US healthcare spending per capita is twice the Canadian cost but coverage in Canada is better.
Of course, if you are in America and you are wealthy then you can buy tip-top healthcare just like Steve Jobs did - but it still won't buy you a miracle.
For an awful lot of the daily services, government can run things just as well or better than private industry - if they are adequately funded. On the other hand, private contractors can take over and run public utilities for a much lower cost .. for a limited time. Since, if you don't spend money on maintenance you can put all that money into your own pocket. And when everything goes to hell the government will be forced to step back in and fix everything up again at the cost of the taxpayers.