I think its more because their contract has an expiration date. They get paid more because there is a "risk" that they could be unemployed for some time before

I think its more because their contract has an expiration date. They get paid more because there is a "risk" that they could be unemployed for some time before they find a new contract (not likely for programming jobs, but speaking about contractors in general...) whereas a gov't employee has a huge amount of job security. Its a choice of Money vs. Job security.