I'm currently an intern at a government contractor and am getting the (obnoxiously unavoidable) feeling that Word is the de-facto standard in the software development process.
Its binary format makes it very difficult to collaborate on documents in the way I am used to collaborating on a code base. The use of plain text markup (with such languages as LaTeX, Markdown, ReStructured Text, etc.) allows for a diff-friendly document that works well with the normal workflow of a developer. As for comments where the language doesn't support them (eg Markdown), there are many existing solutions that allow collaborative comments on code bases (eg GitHub, Bitbucket) that could easily be applied to other plain-text files containing markup.
I understand the need to cooperate with technologically illiterate management necessitates some sort of graphical interface to everything, but such interfaces exist for most of these formats. (For example, LaTeX has a 'fork' of sorts called LyX that puts a graphical front-end to a plain-text, LaTeX-like syntax. This file, even though primarily graphical in its editing, is still diff-friendly. (Inception comment: it also has Word-style comments.)) Many of these solutions could yet be used instead of Word, and the vast majority are free or open-source.
However, we use Word even for our own internal documentation that nobody else sees. We work with text for a significant chunk of our career---why is documentation so special?