A Government department has been slammed for being "irresponsible" over its role in the collapse of the £5 billion West Coast Mainline rail contract.
A committee of MPs said the Transport Department had embarked on an "ambitious, perhaps unachievable" reform in haste, and claimed that ministers and senior officials were lied to.
FirstGroup was told it had won its bid to take over the franchise from Virgin Trains, but the decision was scrapped after the discovery of "significant technical flaws" in the way the procurement was conducted. Virgin has now been told it can run the service until November 2014, with the fiasco costing taxpayers over £40 million.
The mistakes came to light after bidder Virgin Trains, which had run the West Coast Mainline since 1997, launched a legal challenge against the decision.
A Government-commissioned report led by businessman Sam Laidlaw last month gave a damning indictment of how the competition was handled. Three members of staff at the DfT were suspended over the episode.
The Transport Committee said in its report that embarking on the reform of franchising on the UK's most complex piece of railway was "irresponsible" and needed greater senior executive involvement and more technical expertise.
"A more direct description of what happened is that ministers and senior officials were lied to about how the outcome of the franchise competition had been reached." said the MPs' report. "We cannot categorically rule out the possibility that officials manipulated the outcome of the competition not only to keep First Group in the running for as long as possible, as Mr Laidlaw suggested, but to ensure that First got the contract.
"We recommend that the DfT find a way of undertaking a full email capture, reporting to someone suitably independent, to help get to the bottom of why DfT staff discriminated against Virgin and in favour of First Group during the franchise competition." The committee said that money which could have been spent on transport projects had instead gone to consultants, lawyers and review teams, on work which achieved nothing, and compensated train operators for the DfT's "incompetence."
A DfT spokesman said: "Following the collapse of the West Coast refranchising programme, the Department for Transport was subject to two independent inquiries and an internal HR investigation. These have now concluded but the disciplinary process is ongoing. Independent experts concluded the collapse of the West Coast franchise programme was caused by a number of failures, including inadequate planning and weak governance structure but not systematic failings in the department. The examination of emails from key officials found no evidence that this was anything other than simple human error.
"We are putting in place measures that will prevent this embarrassing episode from happening again and the Secretary of State has given an undertaking to keep Parliament updated on costs. While we are currently working to minimise the impact on the taxpayer, we estimate the failure of the competition and subsequent independent inquiries is around £48 million."