The 181-page Howat report accused the government of basic failures in financial accountability and organisation.
The report looked at spending on everything from hospitals and schools to transport and housing. It identified£818m that could be freed up by moving money from programmes not performing well or meeting ministers' objectives.
The experts made a 'best guess' that a further£432m of cuts could be found in the Executive's budget of more than£30bn.
They found ministers and civil servants sometimes spent money for the sake of it.
The report says: 'Programme management is too much about spending the available budget, rather than defining clearly what needs to be provided.'
It adds there is 'insufficient understanding of the purposes and principles of government accounting across the Scottish Executive'.
It states: 'Scotland's public services are delivered through a complex and costly web of public bodies and agencies.
'This 'crowded landscape' should be reviewed as soon as possible to determine whether fewer organisational entities could be more effective at delivering outcomes and could do so at a reduced cost.'
The report calls for a 'systematic reassessment' of the relationships between the executive, its agencies and quangos.
In transport, it proposes saving£67m by cutting motorway and road maintenance to a minimum and taking£57m off grants to bus firms, raising fares by 17%.
£1.7m would be saved from merging the Scottish police and fire colleges, it recommends.
Convention of Scottish Local Authorities president Pat Watters said:
'This proves beyond any doubt that when people are looking for savings and efficiencies in the public sector the first port of call should not be local government. It is obvious that the microscope needs to go elsewhere'.
Pointing to an independent study in 2005/06 which showed that Scotland's councils made efficiency savings of over£122m, he said: 'Scottish local government has a long and respected track record in generating efficiencies that others could learn from.
'Local government would certainly be very interested in any excess unused monies within the executive coming to local government and going to frontline services for communities - this is the golden thread that runs through everything that we do.
'We look forward to speaking to the new minister about any role local government can have in passing on our expertise in efficiency savings or in identifying spend.'
Finance & corporate services