External Consultants vs. Internal Business Analysts: Who Is Better?

From the perspective of a consultant to federal agencies (a ‘contractor’ or ‘Beltway Bandit’): 

My thoughts on how article on External vs. Internal Consultants applies in the US Federal space:

• If you look through the postings on usajobs.gov, you will see many postings looking for business analysts and program analysts; I think the quality will vary greatly from agency to agency, ranging from those to those w/ extensive experience who have been laid off from the private sector, to recent grads, to federal workers who have worked their way up. Many govt administrators/mid-level managers are called analysts, but may be more focused on making FY budget allocation decisions specific to their assigned area, rather than applying rational, standardized business case analysis across many different projects.
• I do know that certain govt agencies have dedicated business analysis/consulting organizations or functions: DoD Businss Transformation Agency ( ironically, dismantled upon the behest of Secretary Gates), the OMB (Chief Performance Officer, etc—see Leif’s latest post), the Presidential Management Fellows program, and interestingly, the FBI Special Advisor Program (which I applied for—hires recent MBA grads). Being a true business consultant is difficult within a govt agency. This function would have to report directly to the C-level in order to give objective advice and a wide perspective—-otherwise they would be subject to the bureaucratic turf wars that happen between competing organizations within an agency.
• Also, you can imagine the reasons why any one of us would prefer being an outside analyst/consultant vs. a federal analyst/consultant: career flexibility, progression, compensation, etc. This is not to say that we are better. However, you can imagine that there is a trade-off between having in-depth insider experience and having a fresh perspective and exposure to many different ideas outside of any one particular agency.
• Though more relevant to the commercial space, this article brings up many good points: the burden on us as relatively younger professionals to prove our worth and ‘work ourselves out of a job’.