ONE OF THE CARDINAL rules of government should be that when goods or services are needed, government will get them as cheaply as it can. In fact, that rule lay behind the effort made a little more than a year ago by the Ford administration to expand vastly the government's practice of "contracting out." The idea was that many of the things some federal agencies now do for themselves - providing guard service, building maintenance, cafeteria service and so on - could be done just as well, and more cheaply, by private industry. Understandably, some government workers, and their unions, did not take kindly to this effort. And their protests have now resulted in a partial reversal by the Carter administration of the directive issued by the Office of Management and Budget.

We suppose that the compromise, announced this week, is about what might have been expected. It does not encourage government agencies to contract out work their employees already are doing, but it does prod them to turn to private industry when additional services are required. We think the Ford administration's basic approach was better, it would have further reduced government costs, but it failed to provide a satisfactory alternative for existing government workers whose jobs would have been contracted out from under them.

Crucial to this whole problem, however, is the Carter administration's concurrence in last year's finding that the government has been seriously under-estimating its own costs. Before last year, the government was using 7 per cent as the appropriate retirement charge to be added to its wage bill when cost comparisons were made. The Ford people boosted that to 24.7 per cent and the Carter administration has concluded it should be 20.4 per cent.

This means it will be much easier in the future for private industry to win contracts for services that would otherwise be provided by additional government employees.

There are, of course, problems with contracting out. The government must see to it that the contractors it selects do not produce low bids by exploiting their workers. And there are some jobs, even routine jobs, that should be done by government employees as a matter of principle. But as a general rule, if private industry can do the job cheaper than government employees, it ought to do it. The point is to give taxpayers their money's worth.