Let's start with a theoretical large commercial software/hardware company called.... PH.
PH sells a software suite for large scale server management that at your large company, would wind up costing 30 million dollars in licenses.
When the quote comes back however, its 4 million.
Why is the list price so different than the actual price? Do they just want to pretend you are getting a deep discount for being such a "good customer" ?
When the government wants to buy computer software/hardware, it has to go through the government buying/bid process. However, my first year in college, an "Intro to Marketing" instructor who was a retired marketing man explained the scam to me.
The vendor you want, sits with you (the gov't person), and has you write your requirements so that only their product fits the bill. So when it goes for bid, it's rigged.
Now, add that corrupt process with unreal pricing and you get how taxpayers subsidize the latest "cloud management" stack from Oracle, EMC, HP, or the other captains of industry.