Tom Adelstein has written a great series of articles on the use of open source software (OSS) in state and local governments.
Tom is helping to head a project called the Open Government Interoperability Project whose stated purpose is to provide "a blueprint for government software interoperability, exchange and data access." The project has compiled a list of over 185 local government applications that could be built as open source.
The project's position statement ought to be read by every government worker in the US. Note that I didn't say "IT worker." Don't make the mistake of thinking this is something that just the techies need to know. Most of them probably already know it at some level. Its the business managers that need to understand why interoperability is crucial to their future and how OSS can play a role.
The project will provide a framework, common database vocabulary, a toolkit and other support necessary to carry off their vision. I hope the database vocabulary include support for developing common data models and XML vocabularies as well.