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Worst dev team failure I've experienced?

One of several.

Around 2012, a team of devs were tasked to convert a ASPX service to WCF that had one responsibility, returning product data (description, price, availability, etc...simple stuff)
No complex searching, just pass the ID, you get the response.

I was the original developer of the ASPX service, which API was an XML request and returned an XML response. The 'powers-that-be' decided anything XML was evil and had to be purged from the planet. If this thought bubble popped up over your head "Wait a sec...doesn't WCF transmit everything via SOAP, which is XML?", yes, but in their minds SOAP wasn't XML. That's not the worst WTF of this story.

The team, 3 developers, 2 DBAs, network administrators, several web developers, worked on the conversion for about 9 months using the Waterfall method (3~5 months was mostly in meetings and very basic prototyping) and using a test-first approach (their own flavor of TDD). The 'go live' day was to occur at 3:00AM and mandatory that nearly the entire department be on-sight (including the department VP) and available to help troubleshoot any system issues.

3:00AM - Teams start their deployments
3:05AM - Thousands and thousands of errors from all kinds of sources (web exceptions, database exceptions, server exceptions, etc), site goes down, teams roll everything back.

3:30AM - The primary developer remembered he made a last minute change to a stored procedure parameter that hadn't been pushed to production, which caused a side-affect across several layers of their stack.

4:00AM - The developer found his bug, but the manager decided it would be better if everyone went home and get a fresh look at the problem at 8:00AM (yes, he expected everyone to be back in the office at 8:00AM).

About a month later, the team scheduled another 3:00AM deployment (VP was present again), confident that introducing mocking into their testing pipeline would fix any database related errors.

3:00AM - Team starts their deployments.
3:30AM - No major errors, things seem to be going well. High fives, cheers..manager tells everyone to head home.
3:35AM - Site crashes, like white page, no response from the servers kind of crash. Resetting IIS on the servers works, but only for around 10 minutes or so.
4:00AM - Team rolls back, manager is clearly pissed at this point, "Nobody is going fucking home until we figure this out!!"
6:00AM - Diagnostics found the WCF client was causing the server to run out of resources, with a mix of clogging up server bandwidth, and a sprinkle of N+1 scaling problem. Manager lets everyone go home, but be back in the office at 8:00AM to develop a plan so this *never* happens again.

About 2 months later, a 'real' development+integration environment (previously, any+all integration tests were on the developer's machine) and the team scheduled a 6:00AM deployment, but at a much, much smaller scale with just the 3 development team members.

Why? Because the manager 'froze' changes to the ASPX service, the web team still needed various enhancements, so they bypassed the service (not using the ASPX service at all) and wrote their own SQL scripts that hit the database directly and utilized AppFabric/Velocity caching to allow the site to scale. There were only a couple client application using the ASPX service that needed to be converted, so deploying at 6:00AM gave everyone a couple of hours before users got into the office. Service deployed, worked like a champ.

A week later the VP schedules a celebration for the successful migration to WCF. Pizza, cake, the works. The 3 team members received awards (and a envelope, which probably equaled some $$$) and the entire team received a custom Benchmade pocket knife to remember this project's success. Myself and several others just stared at each other, not knowing what to say.

Later, my manager pulls several of us into a conference room
Me: "What the hell? This is one of the biggest failures I've been apart of. We got rewarded for thousands and thousands of dollars of wasted time."
<others expressed the same and expletive sediments>
Mgr: "I know..I know...but that's the story we have to stick with. If the company realizes what a fucking mess this is, we could all be fired."
Me: "What?!! All of us?!"
Mgr: "Well, shit rolls downhill. Dept-Mgr-John is ready to fire anyone he felt could make him look bad, which is why I pulled you guys in here. The other sheep out there will go along with anything he says and more than happy to throw you under the bus. Keep your head down until this blows over. Say nothing."