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It is anecdotal, but there are a lot of stories about departments spending their full budget at the end of the year on frivolous things because they know that if there is any unused money in their budget then it will be cut from next years budget.
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This exact same thing happens in the private sector too (Edit: beaten by Slava and SeaBass). Just because an organization has a profit motivation doesn't automatically make it super-efficient.
I work for a consulting company with clients in both the public and private sectors (both SMB and enterprise segments). In my experience, government is no more wasteful than business. If anything, the government agencies we work with tend to be
more lean than our for-profit clients (obviously this is anecdotal only).