Actually, Oracle's business software is far too complex for lamebrained government IT people - third-rate employees who work at a significant discount compared to their public sector counterparts. This project was probably doomed no matter what they chose. It sounds like the individual state departments were at least wise enough to realize that they couldn't handle the implementations.
Microsoft doesn't have a competing product in this space. SAP, Siebel and PeopleSoft would be the likely competitors.