FOSS is so good for government idk why there isn't more of it, of course having someone to blame for/call when something is not working is what they look for. I wonder if having functional software isn't better.
Plenty of open source talent in Oregon. I imagine there'd be many volunteers for a big DB/web project. It should be possible to do, after all, would Cover Oregon be more complex than Firefox or the Linux kernel?
In theory, not be all that difficult to hire a good project management team, set up the framework and let contributors work on it. Probably get done much quicker and of course, at way less cost.
Of course, doing that is taking a risk which is routinely avoided by timid bureaucrats and enterprises. Though the lesson of Oregon's experience is there to be learned--it shows the far bigger risks of doing things the same old way.
Hire bigco, publish what they give you so the neighbours can also use it and you're not stuck with bigco for support. ie you can also fire bigco if they suck once you hired them.
Maybe my interpretation of your idea wouldn't work exactly as you has in mind, but I see your point, that maintaining greater control of the development process would likely lead to a more coherent and predictable product that functions in accordance with carefully designed specs.
Among flies in the ointment is the necessity for such a highly principled and skilled steering group to manage the effort with the requisite wisdom around scheduling releases and titrating the level of community involvement. The level of talent it implies is likely in short supply.
That said, an admiral proposal, distinctly possible, even revolutionary. To quote Spinoza, "all things excellent are as difficult as they are rare".