The most innovative and productive researchers, for various reasons, seem to shy away or are encouraged to not be members of these committees. The committee will know that there is only X amount of funds available so their task becomes one of deciding which research proposals should get the money. This is a formidable task. Committee members are also aware that everyone should get something or there will be idle hands, unhappiness, and a general decline in morale. Sometimes this causes the really good proposals to be underfunded.
Favoritism is difficult to exclude from the process.
It is a very subtle thing that is hard to recognize. People fall prey to it through omission without realizing it is happening. And there are other agendas the committee must consider. Nowadays research must be multidisciplinary. This is also a subtle issue because who among us would not agree that multidisciplinary research is desirable.