Licensing problems. For new projects this sounds great, put the code either in the public domain or they pick a license. Which one? MIT/BSD, GPL/LGPL, or something else? The former can generally be incorporated into the later, but what if they pick something else that's incompatible? At least we can see what was done and learn from it I guess. And what if they require a particular license as part of the policy and it prevent government projects from extending existing OSS project? That would be a shame.

The intent seems good, but the details will be everything.