I know this is late to the conversation by nearly two months, but I feel the need to respond to Dave Winer's "Government develops software differently" post regarding the federal health care site rollout.
Having managed federal software development efforts as a project manager and contract manager during my career, I can attest that Dave hits a solid point. It is very difficult to do any software development effort at any scale without using the full specification and waterfall deployment he describes. The government is unable to accept anything other than a full delivery because of how the contracting establishment approaches buying software development. They insist on full definition upfront because they do not know to contract with the requirements flexibility a startup-styled approach would require.
We need contracting and project management personnel that can make quick decisions on the fly and incorporate user feedback throughout the process. Although difficult because it opposes the bureaucratic inertia present in federal contracting, it is possible to take an Agile approach to federal software development. However, until the system is design to reward this type of behavior, I do not see the federal government changing. Too often, "success" is getting the deliverable as defined 18-36 months earlier regardless of what the users want.