In its report, PAC said the lease – which cannot be terminated until at least 2033 – was signed without further comprehensive radon testing being carried out.
The report said a reduction to the annual rent or safeguards to mitigate the financial risks of increased radon levels were not negotiated and “poor commercial decisions” were made when the lease was signed.
PAC said improvement costs until the lease ends would cost £68m and neither the MoJ or HMPPS had clear plans for the prison’s future.
It added MoJ and HMPPS were now less than certain reopening the site represented best value for money.
Sir Geoffrey Clifton-Brown, PAC’s chairman, said the issue was an “absolute disgrace, from top to bottom”.
“Dartmoor appears to the Committee a perfect example of a department reaching for a solution, any solution, in a blind panic and under pressure,” he added.
“This is, obviously, not how policy should be delivered.”
The Duchy of Cornwall said: “Dartmoor Prison has been let to the Ministry of Justice since 1850.
“The Ministry of Justice and the Duchy of Cornwall are in regular communication in connection with the lease and the current temporary closure of the facility.”