I've failed missions -- BUT the problem is that the game is geared for not failing missions. On redside I failed a mission to protect some research that would save the life of King Midas. (I know, I know. I didn't get that what I was supposed to do was stand there by the equipment and kill everyone who came near it. I went scouting around for mobs and got the fail message.) Even though I failed it, references to Midas still being alive keep coming up.
There was also one blueside where I had to rescue someone and lead her out of where she was held, and she died on the way because she insisted on fighting every. single. enemy. we came across. Even though I technically 'failed' the mission by not protecting her, there were no consequences -- she was still there as an NPC outside the rescue mission. Technically you could do a rescue mission and get to the person, and not bother leading them out; you could just quit the game at that point, or leave without making sure they follow, and you still succeed.
So if there are going to be more chances for failure, there have to be storyline branches that take failure into account.
