How to replace a third party AWS cloud accounts provider with bespoke account governance?

• why would our internal cloud team not buy accounts straight from AWS?

They probably get discounts. These large "billing consolidation providers" invoice their customers millions of dollars per month and for that they get decent discounts from AWS, Azure, etc, and pass on some of that to the customers. Typically you get around 5% discount.

The big downside is that they technically own your accounts and depending on the billing provider and the configuration you may be quite restricted in what you can and can't do. Typically you can't create sub-accounts as you have seen yourself, often you can't view billing data directly (e.g. AWS Cost Explorer) and will be forced to use the billing provider's portal for that, you may not be able to buy reserved instances or spending plans or even subscribe to support plans directly, etc.

I personally hate these billing arrangements - the little discount is not worth the limitations and the loss in productivity it brings. But the management often only sees the 5% discount on the bill and not the frustration and the extra hours their engineers spend fighting and working around the restrictions. It probably costs them way more than those 5% in the lost productivity, but hey, that's not as visible as a discount item on an invoice.

That'd be my explanation ;)