You say this as if they aren't like 10+ year contracts :) Also, they often come with crazy requirements and local IT support (designed this way in order to ensure only lexis/westlaw can fulfill them).

That sounds suspiciously like Corruption.

Sorta, but not really. Usually what happens is that a company works with a state or local government on custom projects for so long that they create their own niche which is extremely difficult for a newcomer to fill. This is mostly just an emergent property of bureaucracy. Eventually these niches are choked off and die, however it takes decades.