There are couple of considerations in the Govt Cloud, some of them are
Govt apps (like in iTune, Google Apps)
Storage / Virtualization
Mainframes / Server
To each of these Fed CIO has a vision, although very presentation layer centric.
Govt is only looking at ways to subsidize the spend on IT, mostly in the infrastructure spend area, which constitutes about $30 Billion of the total $76 Billion IT Portfolio. To this effect they are hoping to drive for "economy of scale".
Like you suggest, cybersecurity remains an issue. And, then money spend on Fed IT seems to have much redundancies.