The government has failed to investigate a claim that large systems integrators operate like a cartel, according to a report by the Public Administration Select Committee (PASC).
The PASC had previously reported on allegations that some large IT suppliers were behaving in "anti-competitively" and "collusively" and had recommended the government carry out an independent, external investigation into the claims.
"We are disappointed that the government does not address this recommendation in its response, and we expect to return to this point in a future inquiry," the PASC said, noting that it may be a structural rather than a deliberate problem.
It added that a lack of up-to-date and accurate information about government IT made it "impossible" for the government to identify potential overcharging, which has resulted in the waste of "an obscene amount of public money".
MPs on the select committee have also accused the government IT procurement strategy of lacking in its commitment to independently benchmark contracts with transparent data, and of failing to understand the risk of legacy systems.
They said that the Cabinet Office's commitment to using transparent data to help benchmarking will help, but without taking on the committee's recommendation to use independent, external advice, the overall outcome will not change.
"The government will not achieve its cost reduction agenda," the PASC warned.
It also said that it was not convinced that the government's approach to legacy systems properly addressed the underlying issues.
"At the very least, the government should produce a long-term risk register identifying where and when investment will be needed to migrate and replace existing legacy systems," the PASC stated.
Although the PASC welcomed the government's response acknowledging the need for it to grow its technical IT and commercial procuring skills, to become an 'intelligent customer', it was concerned that the government's plans did not fully encompass the scale of the culture and process change required across government in order to make it a success.
In addition, the committee said that the government could also go faster in implementing its 'digital by default' strategy.
It suggested rewarding civil servants for embracing social media and digital channels to share information and provide services, and using the social media channels to assess how it can improve public services.
Bernard Jenkin, chair of the Committee, said: "This was a generally constructive response which we welcome, but it does not suggest that the government yet grasps how much must be done.
"The problems in IT procurement go deep and require major changes. This can only be achieved by bringing in IT executives and buyers from large and small companies, who understand what they are buying and the innovations on offer. This expertise cannot be contracted out. It is a people challenge. The few new people brought in so far are having to battle against the failed culture of the establishment."