A damning report by the National Audit Office today will deliver a fresh blow to ministers' hopes of containing the debacle that led to the award of a 13-year contract to run West Coast passenger trains to First Group being abandoned.
It follows Transport Secretary Patrick McLoughlin's decision to award a 23-month franchise extension to Virgin Trains, which will earn a fee equivalent to 1% of revenue for running the London to Scotland trains.
The deal is longer than the nine to 13-month contract originally planned by Mr McLoughlin and avoids the need for a separate two-year interim franchise.
Auditors have concluded five safeguards that would have prevented errors in the bidding process – including a clear vision, senior oversight and strong project and programme management – were absent at the DfT, which has seen four permanent secretaries in two years.
The report has identified an additional £8.9 million costs on top of the £40m earmarked so far as a result of the competition's cancellation, though this does not factor in the cost of extending other rail franchises, which is widely expected to take the bill beyond £100m.
However, ministers took comfort from a separate report by Centrica boss Sam Laidlaw, which concluded that neither they nor senior DfT executives had been made aware of flaws in the bidding process.
Three DfT civil servants were suspended after the scrapping of the franchise process. One of them, Kate Mingay, has mounted a legal challenge against the department. It was announced yesterday the three suspensions had been lifted.
In an effort to restart its beleaguered rail franchising process, the DfT said there was "nothing in the report to suggest the flaws discovered in this franchise competition exist in any other DfT procurements".
It pledged to create a "simpler and clearer" system, including the appointment of a single director with responsibility for all rail policy and franchising.
In the Commons, Mr McLoughlin, who had initially defended the original FirstGroup decision when he succeeded Justine Greening at the DfT in September, told MPs the report would make "uncomfortable reading for the department".
He said ministers had made the original franchise award "without being told about the flaws and after being given inaccurate reports".
However, Shadow Transport Secretary Maria Eagle blamed decisions and failures by ministers for the collapse of the franchise. Veteran Labour MP Sir Gerald Kaufman said it was "unacceptable" Ms Greening, now International Development Secretary, was still in the Government.
Mr Laidlaw said his report had found a lack of transparency DfT and pointed to "inadequate planning and preparation, as well as a confusing organisational structure with weak quality assurance and insufficient governance oversight".
The DfT's Permanent Secretary Philip Rutnam said: "There is no question that this has been a serious blow for the department and I am determined that we learn everything we can from this episode."