A public accounts committee (PAC) report said there were faults with the tendering process and project management of the National Probation Service's contract for a nationwide information system (NPSISS).
The report said the Home Office had succeeded in rolling out a common technology infrastructure to 49 of the 54 local probation services, but it was 70% over budget and had not delivered all the expected benefits.
It also echoed a series of user complaints, which were initially resisted by the Home Office about the usability of the CRAMS case management system.
The root of the problem was poor project management. The PAC said: "The project management team assigned to the NPSISS programme was badly under-resourced; lacked the skills and capacity to perform effectively; and, with seven programme directors in seven years, suffered from frequent changes of leadership."
Looking ahead, the PAC said: "Any significant new developments [during the life of a long-running government contract] should be based on a clear specification of the required outputs from the contractor, with costs being controlled tightly."
The PAC highlighted "flaws in the original enabling agreement with Integris", which "held back urgent developments".
The report picked up on legal rulings that part of the deal with Integris might have broken laws on tendering. "Future contracts should receive proper legal scrutiny prior to being finalised," said the PAC.
It also highlighted the fact that for a time Integris supplied non-Year 2000 - compliant equipment, even though this fell short of best industry practice at the time.
The Probation Service debacle was one of a series of government failures that led the Cabinet Office to set up a review of major IT projects. That review led to the creation of the Office of Government Commerce's Gateway Review Process for IT projects.