Many governments have their own MSPs (managed service provider) who could host any open source software, just as they are likely in charge right now of many Microsoft admin tasks. And if the government doesn't have one but a branch office wants a regional branch wants a keycloak instance they can always get an MSP for that

I do like your vision of a unified full replacement version. But even just gathering everyone's requirements for that seems like a near impossible task that would take years. And the end result would almost certainly end in a mess that's too restrictive for some, unusuably unsecure for others, and have a set of apps that will always be slightly wrong and difficult to change. These huge top-down solutions rarely work well