It’s not necessarily that they don’t understand, but rather that they have very different incentives. I remember talking to one university purchasing agent whose senior manager kept a detailed account of how many of their vendors went bankrupt. If this percentage got too LOW, they were instructed to just stop paying out any purchase orders where the goods had been received. Any vendors upset at providing their services for free could take it up with the legal department. Or go bankrupt. Either way, every dollar unpaid to a vendor was a dollar back in a tax payer’s pocket. Ignoring these bills was a civic duty.

A different university had a policy to prefer orders from small businesses for just the same reason. The local suppliers knew that, on any given job, there was about a 10% chance the university would never pay up. They could sue, but a) the legal department had handle thousands of these cases and had gotten pretty good at it, and b) they would be banned from any future bids. One percent of the time, some one would get stiffed twice in a row and go under, but, hey, if you aren’t okay with risk, then maybe the public sector isn’t the place for you.

Anyway, that’s the prevailing attitude that I encountered. They are ACUTELY aware of how money is earned and will do everything in their power to stop you from earning it.