I kick around a campaign on http://www.oss4gov.org/manifesto that basically says local government like Munich has at least 2000 legally mandated services to deliver and software is or will be involved in all of them and almost all that software is proprietary
I swear that there is a huge amount of OSS development still to be done for the public sector - but it will not spring up organically - I mean who scratches the itch for "election management software"
And yet I keep trying to get a gig as public sector open source development and boy it is tough - despite the rhetoric all the tenders assume you will chRge a license