Defence officials spent nearly £600m on technical advice which was intended for equipment, an internal report has revealed.
The audit of contracts since 2009 found control of budgets at the Ministry of Defence were “poorly developed or non-existent”, while civil servants made little attempt to ensure value for money, it was reported.
The findings came as the MoD looks to cut thousands of military and civilian personnel but Whitehall sources insisted stricter rules were now in place to make sure the problem does recur.
Under Labour, rules were changed to allow civil servants to bring in technical advice and support without ministerial approval as it sought to carry out ship-building programmes and other major projects.
But spending spiralled, with figures obtained using the Freedom of Information Act showing the MoD spent £564m in the last two years on contractors.
Currently, 380 firms are being employed for technical support. It spent just £6m in 2006.
Defence Secretary Philip Hammond said rules had not been followed, but he blamed 10 years of poor financial management in the Ministry of Defence.
He said: “Have the guidelines and procedures been followed properly? On the evidence of this report, they have not. The Ministry of Defence has a culture of sloppiness around financial discipline and management controls. Ten years of lax controls under the last government has created an environment in which good financial discipline is not the prevailing culture.”
Mr Hammond said the same auditors would be carrying out checks after a new agreement for technical support comes into effect next April to ensure such problems do not happen again.
He added: “We are getting to grips with these problems but we are dealing with a legacy of mismanagement that is deep and will take some time to turn around.”