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I wasn't so much disputing the reasonable-ness of the profit margins as much as the policies of the providers. How are you supposed to keep track of how much profit is actually earned? Balance sheets etc. are notoriously easy to manipulate. By letting the refugees vote with their money we need not be concerned with profit margins as the market would(ideally) take care of itself. Win-win for both parties if this kind of system could be made to work. It would essentially be removing the government as an intermediary.

That profit margin seems really low, unless the contract they have is a cost-plus type where they are guaranteed to have their costs paid plus 3.5% profit. Otherwise the risk seems too high to settle for a profit margin that low.

I'd say it's to avoid a monopoly.