Difficult to think of an area in MoD controlled by one man and 3 helpers that is responsible for £600M (assuming that is the intended figure). Unless you're speaking of the IAB.
However, it is possible, because the mandated process of "Requirement Scrutiny" (whereby, ultimately, an individual makes a written declaration to the effect an agreed price is "fair and reasonable", and signs it) is serially abused. Knowingly making a false written declaration is Fraud by Misrepresentation; as I said earlier, this is not an offence in MoD, but it is an offence to refuse an order to commit that fraud.
I do know of one £4Bn Army programme that was kicked off with such a statement, but that was rank incompetence rather than a conscious act and ignored when it reached AbbeyWood. The real problem is that mistakes are always uncovered by those who understand, who tend to be much lower grades. By definition you are exposing incompetence at the highest level, so many decide not to say anything and just go ahead and waste the money. (And, hence, the later perceived need to make "savings at the expense of safety", rather than get to the root).
I do not like the term "whistleblower". It has negative connotations, but reporting such fraud is a legal obligation. I do however recognise the general attitude described, although cannot believe a Team Leader has the authority to dismiss on the spot. I certainly didn't and I never knew anyone who did. But I have certainly come across many who threaten such things, and learned very early that a mic and recorder planted firmly on the desk works wonders. It is why I am so confident about the above ruling. So your story doesn't surprise me.