Take a look at ControlDraw, it was and is designed for specifying. Primarily the automation, but also instrumentation, equipment etc.
Yes, it is my software, but I know of nothing else like it.
Rather than writing words though, you produce a Model
"was thinking it would be nice to ...database " A ControlDraw model is a database
and somehow have revisions to the 'core' specification we use be tracked and while keeping everything centralized."
It tracks versions of all the contents
"include certain paragraphs "
Well, rather than Paragraphs it has diagrams (including as much text as you want to describe the object) And you can have a library of them that you can import from or reference.
"and the software would put together the base spec for a specific project for the you."
Well, it can produce lots of things from the model, lists of everything, PDF's etc.
Francis