Sounds a tremendously inefficient system where fixed bugs are overwritten and have to be 'fixed' again. Presumably this can happen on multiple occasions, so the merging would seem to be just as important as the fixing?
Actually its extremely efficient, which is why games like ED can be written and sold for such a low price. The ability for multiple engineers to work on the same code simultaneously and automatically merge changes into the main branch is what allows this. Sometimes it goes wrong, particularly if there have been some major rewites and feature additions. But what do you, seriously, expect for forty quid?
You can, of course, put measures into place to reduce bugs and issues to an absolute minimum, but these are extremely labour intensive and, therefore, extremely costly. This is why mission and safety critical software is so expensive (and still goes wrong, blowing up spacecraft, killing patients and crashing aeroplanes).
The rigor to which an developer develops and tests their software is a cost / benefit tradeoff. Frontier could implement more stringent and formal practices, but that would slow down development and increase costs. How much would you be prepared to pay for ED for it to be bug free?