Former cabinet secretary Lord O'Donnell, who retired last December, admitted the West Coast fiasco "does raise some issues about skills in the civil service".
He said civil servants who made mistakes should be held accountable, telling the BBC Radio 4 Today Programme:
There are civil servants up and down the country doing great jobs, but we are suffering some areas where there are skills shortages, in the commissioning area, in the procurement area.
The mess that is emerging over the bidding process for the West Coast Main Line will be costly and raise the question of re-nationalisation.
The decision to award FirstGroup the West Coast Main Line rail franchise has been cancelled, the Department for Transport said.