A massive seven-year government programme meant to increase efficiency has cost the taxpayer hundreds of millions of pounds, a public spending watchdog said.
Whitehall departments have spent £1.4 billion over the last seven years in a bid to save £159 million by sharing "back-office" functions such as personnel and procurement.
Private-sector firms typically slash a fifth off their annual spend within five years using similar methods, the National Audit Office (NAO) said in a damning report.
But a combination of poor co-ordination, over-expensive IT systems, weak or non-existent sanctions and an insistence on highly-tailored services saw public-sector costs rise instead.
Detailed investigations by the NAO discovered that the Department for Transport system had so far cost £129 million more to set up and run than it had saved.
With the net savings of joint working with related agencies totalling only £1.3 million last year, the watchdog said "at this rate it would seem difficult to break even".
One issue uncovered by the report was that the Maritime and Coastguard Agency was blocked from joining the DfT scheme because it did not have security clearance for Whitehall IT systems.
Another unit, set up by Research Councils UK, has recorded a net cost to the taxpayer so far of £126 million - though the NAO said a parallel scheme may help it break even by 2014.
Those sums could be just the start, however, as two of five schemes examined by the NAO - at the Department for Work and Pensions (DWP) and the Department for the Environment, Food and Rural Affairs (Defra) - have not kept track of whether or not the changes are saving money.
The other, run by the Ministry of Justice, was saving £33 million a year and broke even ahead of schedule - at which point officials there also stopped monitoring performance.
Ministers have recognised the problem and put in place plans to shake up the system and impose more central control over the process.
But the NAO warned that the reform was "ambitious and contains significant risk", and urged the Cabinet Office to "consider all of its options" before pressing ahead.
The watchdog also raised concerns that only three staff were engaged in the process.
Labour MP Margaret Hodge, who chairs the Commons Public Accounts Committee, said it was "a shockingly familiar story of spiralling costs and poor value for money".
"The Shared Service Initiative started out filled with good intentions to save money and reduce duplication of back-office functions across Whitehall. This has not been delivered," she said.
"Departments lost sight of their overall objective to save money. Departments ordered tailor-made systems which have cost the taxpayer too much.
"The Cabinet Office is now committed to bring this initiative back under control but it may be too little, too late to achieve value for money."
Sharing back-office functions - also including finance and payroll - was a key recommendation of the 2004 Gershon Review into slashing Government running costs.
In total, eight projects have been set up in various departments - with the five examined by the NAO costing £500 million more than budgeted.
The NAO said one of the main problems was that the bodies that were supposed to be pooling their operations stuck rigidly to individual systems - frustrating the aims of co-operation.
It questioned why officials ordered expensive IT systems without even considering far cheaper versions which would have been more than adequate.
It also blamed a "collaborative" culture of letting individual departments have freedom from central control for the failure to produce any of the hoped-for cross-Whitehall sharing.
Other factors the NAO highlighted were the need for organisations such as town halls to go through a full European Union tendering process in order to join shared procurement schemes and the fact that some bodies were liable for VAT on deals within the system.
That "significantly undermines the business case", it cautioned the Treasury.
Key staff were also missing - with the DWP going without a payroll manager for six months and the DfT lacking a chief operating officer for 10 months.
A system of sanctions against poor performance - and the power for the Cabinet Office to require bodies to sign up to collaboration - would also help, the NAO said.
NAO head Amyas Morse said: "The initiative for government departments to share back-office functions has suffered from an approach which made participation voluntary and tailored services to meet the differing needs of individual departments.
"The result was over-complexity, reduced flexibility and a failure to cut costs.
"The new Cabinet Office strategy on shared services acknowledges these issues but, if it is to achieve value for money, it must learn the lessons from past implementation.
"Only in this way can the sharing of back-office functions have a realistic prospect of contributing towards the government's drive to cut public spending in the long-term."
A Cabinet Office spokeswoman said: "We have been clear that the Government will leave no stone unturned in the hunt for savings. The Government has already announced a new approach to shared services that will cut through the current complexity in the current system and save money for taxpayers.
"The Government is committed to the correct management of major government projects which previously have not always delivered what they set out to achieve.
"A Major Projects Authority - which reports directly to the Prime Minister - was created in 2010 and introduced tough new controls for major projects to manage risk.
"The new approach to shared services will be overseen by this authority to ensure it delivers for taxpayers."
Robert Oxley, campaign manager of the TaxPayers' Alliance, said: "Whitehall bureaucrats appear utterly incapable of taking steps to work more efficiently and save taxpayers' money.
"It defies belief that civil servants have wasted such incredible sums on an exercise that has failed so spectacularly to save any cash.
"This gross failure suggests an institutionally lax attitude with taxpayers' money that cannot be allowed to continue unchallenged.
Hard-pressed taxpayers can't afford to keep handing Whitehall a blank cheque only to see it frittered away with nothing to show for it."