I get a bit frustrated when people start thinking that "entities" (corporations, governments) should have the same rights to "choice" as individuals, personifying these organizations and trying to give them basic human rights; how silly!
I think we forget sometimes about the notion of "popular sovereignty" - that the thing that gives governments their right to exist and make decisions is a mandate from the people whose lives they affect. Those people need to have the right to impose boundaries on the government's CIOs and decision makers to act in their best interests. The government is not an autonomous agent with the freedom to make its own "choices," but rather, is and should be a constrained actor and agent.
Tim's assertion could be compared to the following sort of claim: "forcing IT buyers in state IT offices to go through competitive bidding restricts their right to choose the vendors that they feel comfortable with." Mandating something like competitive bidding in government IT is a good idea as a safeguard to get the people from being screwed - yet it restricts choice. We agree to live with this balance because we realize that they state has an obligation to its citizens (just as a corporation practices the restrictions of its own rights through corporate policies to protect its shareholders).
As a California taxpayer, let me get to the point: above and economic or other consideration, the government and academia have an a priori ethical obligation to protect the best financial interests of its citizens, and to contribute back into the commons by purchasing services that can best benefit not only the cogs of government machinery but the people who _pay_ for that governement to run. Screw Mundie's "software ecology" - we all know that the Oracle scandal is the equivalent of dumping oil in the river that taxpayers drink out of. We wouldn't have had to put up with this is state government IT could have selected to pay for services they needed instead of licenses they perceived they needed.
What to California taxpayers get out of that deal? Most of it was for licensing, of which (according to Oracle's 10Q) only a fraction of which goes to R&D and into engineers' pockets. Most of that money benefits out-of-state investors and a select few dealmakers. If California stops spending on licenses and starts primarily spending on services, they will be guaranteeing people jobs.
Besides the fact that this is the right way to invest in the people who fund this state, open source (and dare I speak it?) free software are the best environments for providing solutions that are better in quality (molds to fit use-cases, you pay for what you need) and cheaper than what the proprietary alternatives provide.
I think rather than giving state IT managers "freedom," we ought to give them "liberty" (in J.S. Mill's sense of the word) - that is freedom taking into account the rights of the people who your actions affect. In the case of government, this ought to also mean benefiting those who give you your mandate (in a "social-contract" sense). It is quite clear to me that we ought not to treat the State of California (or Peru) as a sovereign individual with a right to "choice" (after all, this mimics the "divine right of kings"), but rather as a constrained actor, acting in the best interests of the people.
Before you start defending "choice," it is worth asking "who" is making the choices, and what interests might influence them. It is also about making sure these people making choices on someone _else's_ behalf are kept from making corrupt or poor decisions. It is easier to contractually obligate the performance of services companies than to pay (potentially) unreasonable amounts in licensing fees. Without constraints, sales reps and deal-makers will have more power to sway each individual vendor choice that the people's best interest.
One caveat: I'm not defending "popular democracy," but popular soveriegnty, in a more republican sense: we have elected officials that can act on our behalf, and set rules. I'm not saying that we should have a ballot referendum for each vendor choice, but rather, we should put (legislatively, on behalf of the people) constraints on how to select a vendor.
It is time for "popular sovereignty" to show its face in the State's IT policies, and give the people the right to demand a better environment for the improvement of government process, free and open software, and lower costs - all benefits to be given back to the people.
It's all about the people - never forget that.