1. If the public money being thrown at SpaceX were redirected, what could NASA (or other private companies) do with it?
2. If the administrators of NASA collected $80B (combined) in salary and bonuses last year, largely from public coffers, would that be considered reasonable?
NASA knows exactly what they're buying. They've just become such a bureaucratic, top-heavy, risk-adverse organization (by Congressional design) that it's a better deal to outsource pieces to SpaceX.
Although Raptors are a great achievement, their design if used alone is not made for bigger loads. SpaceX is stacking them now for larger ships. Hopefully the whole system will prove reliable on higher flights, and a different design won't be needed.