I don't get the difference? The NSA hiring experts to work on SELinux extensions is the same as the NSA paying some experts for the SELinux extensions.
The scarce good in this case is the experts' time. In some cases, this works out well as a way to create open source software: if there's a big entity with lots of cash, who really needs that thing and can pay for it in its entirety. But what's being charged for is generally the developer's time, not the software. This is easy to see because, whereas the NSA may pay for SELinux, the next person down the line does not pay for it - they're getting it for free.
This has important implications in terms of the ability to spread the costs around. With proprietary software, it's possible to do so: charge 100 people $10 instead of charging one person $500 and letting the other 99 people copy it for free. You make more money, and in some cases, the market will clear when it wouldn't for the single-payer model.
I think this actually shows up fairly clearly in what's open source and what isn't: stuff that would be a one-off consulting job in any case may or may not be, stuff that's more consumer-oriented is more often proprietary, and stuff that's used by lots of developers as infrustructure is quite often open source.
