For things like government data, they sort of have to run that infrastructure. I certainly do not want my tax data or the like on a Google server or similar. Also people will blame the government anyway, if something goes wrong.

However non government entities can certainly develop software. There is a lot of it used by governments, which is also of interest for private entities and having that sort of tech support is interesting to companies as well. Also it being open source creates competition for getting those sort of contracts. As multiple companies can work on the same project.