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In October the Government U-turned on the decision to award FirstGroup the West Coast Mainline, after finding "significant technical flaws" in the way the procurement was conducted.
Virgin are now running the service until November 2014, with the fiasco costing the taxpayer £43 million.
In its report on the west coast mainline fiasco, the Transport Committee has said 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."
A Government department was today 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.