Government programs work better because money is no object. Business can't afford that, so they cut corners. In the long run, the business model may be more efficient because competition forces innovation and creativity. But the business model doesn't work unless private firms are competing actively. In order to get a real winner, you need lots of losers.

If only one company gets the contract from the government, its not free enterprise. Its just business as usual. A lot of this talk about space capitalism is just self-serving ideological justification for sucking on the government teat.
If that's what its going to take to conquer space, fine, but lets not fool ourselves with pious sermons about the glories of the free market.