A lot of government software moved into some cloud-based, browser-accessible platform during COVID. It depends on the office and the government, but especially with how easily a vendor can modernize legacy software with an LLM, this isn't necessarily a dealbreaker issue. It might make more sense to modernize than rely in perpetuity on the one guy that should have retired 3 years ago and you can't let go because he knows COBOL.
And MS Office corporate licenses account for a significant part of MS's revenue stream. More than 400 million Office 365 licenses paid in 2024, not one-off Windows licenses. So a business might save $150 per person per year on a large group of staff migrating them to a FOSS alternative for email and a replacement for light users that only ever touch Word/Excel/PowerPoint. And they might never know the difference, functionally. That's also less of a tangled web than switching operating systems and network setups that would require work for any users of critical systems. I can see the logic in migrating the willing as a test out of Office, then a few more people every month until you have one pool of FOSS users, and one pool of must use Office 365 users.
That shift might not be nothing to a small business as well, and at scale, might also be significant to larger businesses. Even if 5% of Office 365 users moved over, that's tens of millions of users.