Do many state agencies purchase shampoo and toothpaste? Maybe homeless shelters? Also, how many restaurants are state agencies??? Cafeterias at govt offices maybe?
Like you said, they probably buy gallon size containers. And those are larger than 21 ounces, so are permitted. Do prisons supply 16 oz (or 1/2 liter) bottles of water to their inmates? Or 20 oz gatorades?
None of that is the point. The heart of it is supporting factories that work with other than plastic. It makes such products come into being sooner as the norm.
Yes, new systems can result in the ideal. But probably they will switch to aluminum or steel cans or bottles. They are already available and can easily be filled with water, etc. Whatever is needed.