It’s the same problem as with any other software development: Politics (literally). Some decisions are made by people who are not qualified to make them. Because of the scale of the project, these decisions affect hundreds of devs across dozens of teams with millions of euros swinging one way or the other. Apart from that, when divide and conquer is done properly, the work of each individual team isn’t too different compared to software development in commercial companies. Everything is a bit more relaxed, though. That can be a boon but can also be infuriating if you’re waiting for licenses, hardware, or some team to act.

Oh, it can be rewritten and it should be. But it’s a very time consuming and expensive process. It may take a long time to amortize indirectly though a system that is more stable, easier to maintain, adapt to new laws, and requires less effort to use and operate. It’s not a quick win and not a win in the time frame of one administration - which is why it’s usually not considered a high priority.