As is the case for a lot of restrictions on governments, Free Software mandates are good for the freedom of the citizens -- and the stricter the Free Software mandate, the better.

Governments have their own purchasing terms for every other kind of good -- why should software companies be a special case and dictate their own EULAs?

The problem with governments using proprietary software is when citizens have to license the same software in order to communicate with the government, as happened with the FCC ULS in the USA.

While a Free Software mandate on a government might restrict the purchasing choices of government, an absolute mandate would prevent bureaucrats from imposing unaccountable privatized taxes and regulations, in the form of proprietary software license fees and EULAs, on people who have to use software to communicate with the government.

Matt has a really great point here: "it's clear that money really isn't driving these decisions. Freedom is. Freedom from lock-in to vendors whose interests are not always aligned with the government's. Freedom to build up the local economy..."

People tend to talk about how open source is free (as in free beer) saying that the cost factor leads governments (especially in emerging countries or countries without many resources) to select open source. This misses the point and misses a great opportunity. Many governments do not want to be locked into purchases that require them to pay large sums of money to big software companies in the US and elsewhere. These governments also have the opportunity to grow a robust software ecosystem and create local jobs by using open source. With readily accessible source code and online communities of developers, local companies can be formed to provide support and service, consulting, and system integration. This creates local jobs and supports the local community by combining open source software with local services, something any government would readily champion.

Matt, I understand your logic about opposing government regulations that require a particular software package. If you open the door to allowing this then they could just as easily mandate Windows or other closed source software. However, the problem I see is that government is for the people, by the people. I personally am one of those governed, and I have the right to tell my government to mandate open source, since it is my tax dollars that is going to pay for that software. This is a lot different ethics than what apply to a private business, and it is one of the reasons that so many attempts to privatize government don't work.
Now in truth this is a small issue and most of "the governed" don't understand the discussion, and so having the majority vote on it is just as useless as having the majority vote on whether to install a traffic light on 5th avenue by the Saks store. But, I think if you polled the group of people within "the governed" that really understood the issues, they would vote in favor of mandating open source, at least in the United States. It's cheaper, and in matters of government, the people always want what it cheapest.