If the CAF wants to keep people from going to the PS or a contractor, be a better employer than either. People have decided they don't like it, and took the advice to get out.
I can think of a few times where there was definitely a conflict of interest, but it was at the GOFO level, and it got papered over with a wink/nudge and a theoretical firewall. And frankly I think it overestimates how much anyone in the CAF can really influence something, because really, if you are going to bribe someone to get a decision your way on a big procurement, you are talking about a half dozen organizations with their stupid fat fingers poking into the giant pie until it's an unrecognizable mess and so old it's compost anyway. The brutally decentralized and overly onerous nature of our decision and approval process makes it a lot harder to corrupt just because there is no single decision maker (or two or three). But it's slow AF and I think I would take the occasional bit of corruption and waste if we actually got shit done and had things we needed.
For 98% of the CAF there are no ethical issues. Making it easier to jump into the PS or a defence contractor is in our best interest, as we still keep the decades of experience in the overall organization (generally; some people just add drag). And a lot of our stuff is so niche there aren't any real candidates outside of the CAF applying. We've been hiring a lot of people into the PS on the Mat group side, and it's an easy transition, especially with the CAF priority hiring. I agree with
@Furniture that we should promote this, and stop thinking everyone needs to be a lifer.
I think coming into a trade that aligns with something on civvy street, getting the apprenticeship done and getting experience before walking away is still a really good option. A lot of people are doing that anyway so why not lean into it and turn it into a feature, not a bug?
A lot of the people would be getting out anyway regardless for whatever reason, and can be lots of things like not meeting universality of service, aging out, not wanted to move, or even just liking the type of job and wanting to get off the career progression merry go round (without a punishment posting).
If people are leaving because the CAF sucks, making it suck more in new ways won't make them stay, and if they thought people weren't committed to an organization and had checked out before, kill their opportunities in the same field outside the CAF and watch how twisted and bitter people get then that decide to stay.