The Munich massacrewhere Palestinian terrorists took most of the Israeli Olympic team hostage and which ended with all hostages dead is certainly a top contender.
The main problem was that West Germany simply had no special forces to conduct such an operation, instead, they made do with regular police which were completely unprepared for planning and executing it.
Some highlights from the series of blunders –
The first rescue attempt had to be aborted because the police approaching the building on the rooftops were shown live on national television, which the terrorists were watching since nobody had thought to cut their electricity.
A second plan was to ambush the terrorists while they were walking through a parking garage to a helicopter. It failed when the terrorist leader inspected the route beforehand and spotted the ambush.
There are (possibly fictitious) stories about German authorities turning down an offer from Israel to fly in a special forces team to take over.
The final disaster happened on a small military airport when it turned out there were more terrorists than the German authorities had thought, so that there were fewer snipers than terrorists, and those snipers were just policemen who were also hobby marksmen, using regular rifles, and some of them were in each other’s line of fire.
The resulting chaotic shootout lasted hours and when the terrorists realized they had no chance to get out, they murdered all the hostages.
To add insult to injury, while the shootout was still in its early stages, Reuters reported that the hostages had all been safely rescued, and even a German government spokesman repeated this.
This epic and tragic fuckup eventually led to the founding of the GSG 9.
Grenzschutzgruppe 9 (GSG 9) is the elite Police Tactical Unit of the German Federal Police.