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The chair of the Public Accounts Committee, Margaret Hodge MP, has strongly criticised the Department for Transport's handling of the West Coast Main Line competition.
She said that "no single person" had been in charge of the bidding process, and that for a period of three months "there was no single person in charge at all".
The franchising process was littered with basic errors. The department yet again failed to learn from previous disasters, like the Metronet contract. It failed to heed advice from its lawyers. It failed to respond appropriately to early warning signs that things were going wrong.
Senior management did not have proper oversight of the project. Cuts in staffing and in consultancy budgets contributed to a lack of key skills.
The project suffered from a lack of leadership.
MPs have called for the Department for Transport to "get its house in order" after uncovering "basic errors" in the way it run the West Coast franchise competition.
The department was forced to reverse its decision to award the £5 billion franchise to FirstGroup last October after a legal challenge from rival bidder Virgin Group.
The latest report by the Public Accounts Committee finds that managers had no oversight in the bidding process and failed to respond to early warning signs that things were going wrong.
Committee chair Margaret Hodge said the competition would cost the taxpayer £50 million "at the very least".
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.
This episode revealed substantial problems of governance, assurance, policy and resources inside the Department for Transport.
Embarking on an ambitious, perhaps unachievable, reform of franchising, in haste, on the UK's most complex piece of railway was an irresponsible decision for which ministers were ultimately responsible. This was compounded by major failures by civil servants, some of whom misled ministers.
Many of the problems with the franchise competition, detailed in the Laidlaw report, reflect very badly on civil servants at the DfT. However, ministers approved a complex, perhaps unworkable, franchising policy at the same time as overseeing major cuts to the Department's resources. This was a recipe for failure which the DfT must learn from urgently.
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.
The government's transport secretary has said that his department is taking "swift action" regarding the controversy surrounding the West Coast rail franchise.
Transport Secretary Patrick McLoughlin said:
"The NAO has made a number of recommendations that mirror many of the findings of the Laidlaw Inquiry in terms of the work we need to do to strengthen our organisation and the structures within it.
"We are already taking swift action on this front and I believe the plans we are putting in place to ensure future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, will prevent a repeat of these lamentable failures."
The House of Commons Public Accounts chairman has called the government's handling of the West Coast franchise a "fiasco."
Margaret Hodge, Labour MP for Barking, said: "The DfT's handling of the West Coast franchise was a first-class fiasco."
"It has left the Government's entire policy on rail franchising in disarray, as a further three competitions have had to be put on hold.
"The total cost to the taxpayer of putting it right is currently unknown but is likely to be significant."
Ms Hodge said the Dft had "blundered into this major and complex competition for one of the biggest franchises in the country without even knowing how key parts of its policy were to be implemented".
The head of a report that stated that taxpayers were likely to incur a significant bill over the West Coast rail franchise has said that there are "serious problems."
National Audit Office (NAO) head, Amyas Morse, said: "Cancelling a major rail franchise competition at such a late stage is a clear sign of serious problems.
"The result is likely to be a significant cost to the taxpayer."