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Should public sector companies be barred from bidding for defence contracts?

Public sector heavyweights, including Hindustan Aeronautics Limited (HAL) and Bharat Earth Movers Limited (BEML), were not invited to bid for a tender to build 56 transport planes for the Indian Air Force. While the Ministry of Defence invited eight foreign aerospace vendors apparently because HAL's order book was full, the move seems to indicate a low level of confidence in the capabilities of public sector enterprises operating in the defence equipment space. Aren't PSUs as competent, if not more, than their private sector counterparts? Do share your views with us.