The Federal government's CIO website has a PDF document describing the goals and high-level design of their authentication engine. One part of me is sad to see that they don't envision its use beyond federal agencies. The other part of me is relieved.
The part of me that is sad is sad because I envision a future web where I can get government services without worrying about which agency or even which level of government offers the component pieces. SSO (single sign on) is critical to that happening and if the feds don't share their authentication engine with the states and local governments, its harder to do.
The problem can be solved, of course, with protocols like SAML. No word from the feds on whether they're going to support it or not.