"did not include functional specifications"
Sorry, but there's your problem.
No project should be started without knowing where you want to end up. I don't care if you use Agile or Waterfall, you still have to know what the required functionality is and a company that cannot state its needs deserves to fail.
This is obviously a bunch of high-level "managers" who have never been confronted with the daily grind and think that IT is a magical process that just happens.
Well no, it doesn't "just happen". It needs thought, planning and employee adoption, and you obviously got none of those.