So for anyone who has worked for the government I've seen this scenario play out dozens of times. So what happens when the IT department can't or simply won't keep up with customer demands? Customers outsource those demands - and these days you really can run all of your essential IT services from various cloud providers. There's even a Gartner term for this - "Shadow IT". So the money gets spent anyhow, without any oversight or governance that their central IT department has mandated as a policy. Worse - when the guy who setup said system moves on - the central IT dept often has to take over and manage this now essential system.
Windows XP working as a file server for license plate cameras? Please - that has shadow IT written all over it. Guy needed a file server, the IT guys told him to fuck off (because they have no money or staff), so he rummaged around for whatever piece of shit would power up and used that. And now thats its a national news article - guess what central IT's next project is? If he really cared about IT governance the file server wouldn't be a single XP box, with internal storage. This could have been a VM using some network storage system for FAR less.
These days any IT dept really needs to do what it takes (and that means having a CIO with the political willpower) to make IT keep pace or at least placate these requests in some way. One thing we would do is go ok - your budget, your servers, but we spec them to our standards, they live in our data center, use our storage systems, our backups and our physical/endpoint security.