The failure of the canned £469m FireControl project was due to an inadequate IT contract, MPs were told at a Public Accounts Committee (PAC).
Bob Kerslake, Permanent Secretary for the Department for Communities and Local Government (DCLG), said the project's failure was due to the department's IT contract with supplier EADS. "The contract was flawed as it didn't have milestones to hold EADS to account," he said.
Bob Kerslake also acknowledged that EADS, an aeronautic defence company, lacked experience in delivering control rooms in the UK.
"The project was clearly failing in the way it was conceived and managed, but what in the end led to the project being closed down was the failure of the IT contract from 2007," said Kerslake.
The committee was told the DCLG had to wait until the end of 2010 before pulling the project to avoid exposure to high cancellation fees. In 2009 the department failed to make a convincing case that EADS was failing to deliver, the Public Accounts Committee heard.
Committee member Richard Bacon MP likened FireControl to "lions being led by donkeys", in reference to the ministers and civil servants responsible for the FireControl project and who ignored the concerns of the fire and rescue services.
"What I find extraordinary is the sheer scale of this. The government arranged this along complex, ineffective and unclear lines. This was an extraordinary failure of leadership which cost nearly two-thirds of a billion pounds," said Richard Bacon.
Regarding the ignored concerns of the fire and rescue services, Kerslake said: "Often there is an over-centralist approach to delivering projects. Central government doesn't connect with local players. The history of this goes back a long way. Bluntly put, the approach is: 'central government knows best'."
The DCLG has announced it will set aside £81m to help fire and rescue services improve resilience in the absence of the FireControl project.
Kerslake said the DCLG was working closely with fire and rescue services, which would lead bids of up to £1.8m for each service, to ensure appropriate collaboration. A further £1.8m was set aside to strengthen system interoperability, he said.
But chair of the PAC, Margaret Hodge, asked why this cost could not have been achieved earlier. "We sit here today facing a potential loss £469m, with potential further losses of £180m. Why didn't officials tell ministers that the problem of interoperability and resilience could be achieved for a cost of £83m in 2004?," Margaret Hodge asked.
Kerslake said these costs were incurred as the government was trying to achieve a higher level of resilience than it needed.