The Government is reportedly paying up to 10 times more for IT projects than the standard commercial rate, a group of MPs has warned
The Public Administration Select Committee found ministers were "overly reliant" on a few large suppliers, resulting in the waste of an "obscene amount of public money".
Committee chairman Bernard Jenkin said that according to some sources, the Government paid contractors between seven and 10 times more than the standard rate.
But ministers did not collect the information required to verify these claims, he added.
In a report, the cross-party committee found the Government's overall record in developing and implementing new IT systems was "appalling".
The report stated: "The lack of IT skills in Government and over-reliance on contracting out is a fundamental problem which has been described as a 'recipe for rip-offs'.
"IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose.
"Given the cuts that they are having to make in response to the fiscal deficit it is ridiculous that some departments spend an average of £3,500 on a desktop PC."
The committee criticised the dominance of Government IT by a small number of large companies.
Conservative MP Mr Jenkin said: "The Government has said that it is overly-reliant on an 'oligopoly' of suppliers; some witnesses went further and described the situation as a 'cartel'. Whatever we call the situation it has led to an inexcusable situation that sees governments waste an obscene amount of public money."