I am fully in support of such initiative. So I am interested to hear what the possible downsides are? Please share your opinions on the matter as I can only see upsides to this.
Consider this: your trying to build a grants management system for Defense contractors in Afghanistan. You want to make sure that public money is not going to terrorists sanctioned by the US government. There is a forensic accounting software platform widely used by firms that audit the banking industry,but it is closed source and sold to firms commercially. Should the government spend money on making new software or license the existing software that works extremely well? Should the configuration for what the government creates on that software be open to the public, and open to competitors to imitate? Should they demand that the source code is released? Also what about national security?
Would AWS release all their source code to retain their largest customer, the US government?
I agree that the amount of closed source software used in government projects is staggering and a legitimate barrier to government IT working properly. But the broken process that governments spend money is a bureaucratic nightmare. I am not sure their would be technical downsides, but absolutely their are political ones.
The only thing that I could imagine being an actual downside is the retention of confidential information in the interest of national security or public trust. That is a political minefield already, and open source code can help with security, so I don't even think that is the largest hurdle.