First, not all software can be open source as in "done in the free time by someone". For example tax paying software changes every year quite considerably, needs many patches and there is probably need of responsibility, controlled version/patches tracking, etc. You don't want to have to deal with people who pay wrong taxes because they used the unstable SVN branch. Beside tax paying sw is boring and you can't find many volunteers. Sure you can take a company to do the sw and enforce it to release sources, but the company will probably ask for more money for that.
For off-the-shelf software (say, MySQL, PostgreSQL instead of SQL Server, Oracle) you still have to do many considerations:
1) For limited installations the license cost is moot (let's say you have 50 servers with a $5000 db license on them - that's $250K which for a government is probably not even worth the time lost in talking about it).
2) Trust+Culture. Government people have widely demonstrated not to understand internet, computers, etc. in so many ways. The probability of them understanding OSS is below 0. They may even be in good faith in that.
3) Support, TCO. OSS being free is true only if your time is free. When you put in consultants, experts, employer's time etc. cost increases. Whether it goes over proprietary software or not is another whole matter but cost should be considered as a variable. For example, call-center costs for Windows are cheaper.
4) Fear (justified or not). Somewhere I read "Nobody has ever been fired for choosing Windows". Whether this sentence is right or wrong, if you want to push OSS you may end up being alone (like in your superiors not understanding, not trusting, etc.). Many conscious people still do not have the balls to make that choice. If something goes wrong and you were the one pushing Linux when everybody said Windows...
5) Corp pressure. It exists, nothing to add.
6) Slow environment. In some governmental institutions, there are still Windows 95 PCs around. Not exactly the "tomorrow we will change it all" environment you are thinking about.
7) Installed base / vendor lock-in (it depends on how you see the glass :)).
8) Laws. Each government has its laws on how product can be chosen etc. Free ones may not even be allowed by the law especially if they don't have a legal representative (most major OSS has a legal rep., but not all).
9) Most people don't care. Really, for us geeks this OSS-proprietary war has its meaning.. most people care about it as much as they care about taxonomical classification of flies.
10) Is the company you are working in, running on 100% OSS ? Why not ?