There is more to it than that. A while ago I was chair of the local playgroup/pre-school and we had a contract with the local council to provide pre-school places. So if you had a 3 or 4 year old who qualified for funded hours, you could send them to us and the council paid direct.
The system worked well for about 20 years. Then the council introduced new procurement rules to make sure a parent-run preschool established in the 70s wasn't diddling them out of cash, money laundering, or run by criminals.
OMG the tendering process. We had parents on the committee who were lawyers, doctors, accountants and we all found it so hard to get through. So much paperwork required, so much effort. And this was for a small "contract" to provide about 15 or 20 places, term time only. It was a full time job for about 4 weeks.
So when you are tendering to supply an organisation on the scale of the NHS you can easily see that the process must take months and months. Companies aren't doing that for free and neither should they. Same in all public sector organisations. The PTA wanted to buy the primary school some iPads from fundraising, we were told we couldn't because they had to come from X or Y supplier. Not from Curry's or John Lewis, even though they were cheaper.
Madness. I get that there needs to be checks to avoid people just giving the business to their mates or actively not getting the best deal, but it is costing the NHS and other public bodies a fortune