I BIAB with a pot and a 3ring gas burner and apply direct heat without issue. Some use cake racks to lift the bag from the floor - I don't bother and just ramp up a bit slower.
I use a full volume method, with a liquor to grain ratio of about 7:1. Your ratio for this grain bill was about 3.5:1 which is getting into the realms of traditional ratios in a 3V system. Only you're not using a traditional sparge and bigger bills are notorious for lower efficiency (and while you pour water over the top - you don't have a proper grain bed - I'll wager you're getting massive channelling and really not getting anything out of it). A dunk sparge might work - but I've tried half a dozen variants to BIAB (dunk sparge, infusion mash out, what you do with lifting the bag and pouring water through it) and I get far more consistent results with full volume, proper temperature and a mash out.
I think Labels was right about one thing, your LHBS is doing your crush so it's something that may be affecting and outside of your control.
Funnily enough this thread has been going the same time as the mash schedule thread in which Bum posted this link;
http://aussiehomebrewer.com/topic/54273-rack-for-biab-any-ideas/page-2#entry897732
Which is a pretty straight forward assessment by TB. If you want to understand more though I find braukaiser a great reference - It has a good balance between science and writing it in a way poor old me can understand. In particular the section on Ezymes and Starch conversion.