My late uncle used to work at Raytheon and every year in the last fiscal quarter he and others would start getting calls from the various Pentagon procurement officers who were desperate to spend all their budget money so that they could ask for more from Congress for the following year.
This is why you ended up with $400 hammers and $200 toilet seats. The Pentagon doesn't hire stupid procurement officers and never has. But because there neither the Pentagon nor Congress wants to look "bad" because one asked for more money than was necessary (another way of looking at it would be to say one lied about the military's needs) and the other over-funded that budget (implying incompetence or a collaboration in wasteful spending that might prove politically fatal with concerned/angry taxpayers.)
I would suggest that we need more accurate budgeting, but budgets are deliberately inflated all the time for the same two reasons. The heads of federal agencies never engage in any critical reviews that might cause them to scrap inefficient and/or ineffective programs because the size of ones budget is the way they measure himself or herself.
And the other reason is that because to scrap any program is to create a fight with one or more Congressmen who stand to lose political clout, real or imagined, because a program that operates in his or her district or employs constituents who support him or her is curtailed or abolished. That Congressman might then audit his or her agency to identify other waste that might be curtailed and abolished, thus sparing his constituency, but that merely sets the agency up for a fight or standoff with another set of Congressmen and women, who may be even more powerful than the first set.
I don't know how you solve this problem, but it's a serious one. Normalized corruption of this sort is pervasive throughout the federal government and it lasts because it is in the interest of all the various actors to get along rather than to rock the boat. You could never find examples like this in a well run for profit corporation. I don't think Warren Buffet would let you keep your job at Berkshire-Hathaway if you didn't engage in sound business practices and if you didn't have an eye out for reducing or eliminating inefficiencies and for business fraud. (The American financial economy, on the other hand, acted as though sound risk management was optional and that nearly caused another Great Depression. And now they want to be free of constraints and oversight that could prevent a recurrence and keep consumers from being unwittingly ripped off!)
You ask a question that is not an easy one to answer. A kid I went to high school with (Chris Yukins) is a professor of law at one of the big law schools in the metro D.C. area. As I recall, he specializes in federal contract law. Yuk and other legal and business professors might have some workable solutions to this problem, but getting them implemented would be the real challenge.
Those are my thoughts on the question you have asked.