Defence officials spent nearly £600 million on technical advice which was intended for equipment, an internal report has revealed.
The audit of defence 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, the Guardian reported.
The findings come as the MoD looks to cut thousands of military and civilian personnel but Whitehall sources insist stricter rules are now in place to make sure the problem does not happen again.
Under Labour the 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 by the newspaper using the Freedom of Information Act showing that the MoD spent £564 million in the last two years on contractors.
Currently, 380 firms are being employed for technical support. It spent just £6 million in 2006.
A source at the MoD said: "Clearly, under Labour the system was very loose and controls were not in place.
"This is another example of defence spending getting out of control under the previous government. The new Defence Secretary (Philip Hammond) is aware of this and is cracking down on it."
A spokesman for the MoD said: "The framework ensures that equipment programmes can access a range of technical support services such as independent airworthiness certification to ensure our military aircraft meet the very highest safety standards, something civil servants cannot provide.
"This summer the Government instigated an internal audit to assess the procurement of this technical assistance.
"As a result of the findings of that report, we are tightening the approvals process to ensure proper scrutiny of spending under this framework."