This is something I have not read about much so:
Well, I teach Linux courses for several companies. In the last year or so, almost every course has one or two or five students coming from the IT area of some government office or another.
That includes local and national government, by the way.
Some of them are already on deployment stages on servers, a few even on desktops.
Here's what I know about this stuff:
There's no master plan. Every little place is doing its own thing, all in the same direction. That sucks a bit.
They are going to be in trouble. Lack of planning means people suddenly find their desktop is now Linux, for instance :-). That's not going to be too nice.
They will do it anyway: The governemnt can't buy a dead rat at a sale, much less MS Office
Being a semi-known Linux consultant around here is going to be interesting in 2004
Some people are peddling Linux and are clueless. Others are clued-in, but they are not the ones getting the boss's ears.
If you are in gov. IT, you gonna have to learn Linux quick.
Xandros is making a big push here: it seems some of the development for it is local (they are overselling the local share, though, but this is government, that was to be expected).
Red Hat and SuSE are not selling themselves too well in that area
Lots of stuff is happening, in the quiet. For example, it seems that several provincial Education Ministries are shipping all new computers to schools with Linux in it. Of course they probably get reformatted in 48 hours.
Most servers, specially mail/web/file servers should be switched to Linux before 2006 (this is mostly a guess)
Expect MS to offer a busload of free licenses to the government soon (a guess, too, but want to bet?)