It won't really happen
What software, exactly are they going to use in a cloud. Government is shifting towards ERP and packaged solutions, very few of those, if any, are open source, some can use databases or Linux, but certainly don't integrate to Open Office et. al. The vast majority of applications work on Windows and rely on Orifice for desktop integration.
Don't get me wrong, I think it's a great idea, it'll keep me in consultancy fees for years to come, but you can bet those in the cabinet office who had this idea, really don't understand their domain, or Open Source.
The outsourcers have spent years paring down their software support to just a few key vendors that they can charge low rates for, an Ok we can and do do open source, but you pay a premium because it's not mainstream technology.
How most users will react to having to use an Open Source Office alternative is anybodies guess, most civil service departments went Office because that was what their users had at home and the users liked it.
For open source to really get traction, there needs to be a coherent plan to try it out, with the cabinet office saying, this project will be open source, and it will be a pathfinder, but they don't want the cost or risk, and competitively it's too much risk for an SI to bid open source against, say Microsoft.
So Rahid, if Open Source is the way to go find a proper project you can actually deliver and take the risk.