They did. They failed. There's various thoughts as to why that happened. One of the more commonly accepted reasons is that they just made mistakes. Their nuclear research pile is seen as being rather poorly designed and understood which resulted in the German scientists coming to the conclusion that nuclear weapons would be too hard to produce quickly. Why that was so is probably a good question for /r/askscience/

Heisenberg made the claim after the war that he sabotaged the German project as he didn't want Hitler to obtain a nuclear weapon. However, while he was in custody the British bugged the rooms the German scientists were in and they, including Heisenberg, were all shocked that the US had managed it. He actually disbelieved it due to he wasn't able to produce one for Germany.