The answer to this can actually be found in the film itself, within Riki's introductory speech, wherein he says that the adults have decided not to accept Nanahara's declaration of war on adults. That little detail--the rejection of Nanahara's war, had confused me a bit at first, and I had attributed it to a poor translation until I found a better translation, not of that line, but of the line after it:

"If you (kids) want so much to fight a war, go ahead and fight amongst yourselves!"

And that's the government's game--they're not going to dignify Nanahara's declaration by accepting his challenge, by having their own soldiers wage war on Wild Seven; they're not going to send in adults in whom society has already invested a great deal of money (see the part of Riki's speech regarding the cost of raising a child to adulthood); they're going to save those resources and send in a bunch of juvenile delinquents whom society had already written off, who had no future, to do the dirty work for them.

There's also an evil poetry in having Wild Seven have to fight and kill the same kids whom they were trying to save through their cause--the kind of diabolic reasoning that would make the kids twice as easy to kill (with the linked collars) and who'd set up the original BR program in the first place. Nanahara's death doesn't appear to be the primary objective after all; it would've just been icing on the cake. BRII was made to humiliate Nanahara's cause, and soften him up for a real attack if BRII failed in its supposed objective.

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