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LONDON (Reuters) - Department for Transport (DfT) on Thursday scrapped the bidding competition for the Great Western rail franchise after awarding incumbent operator FirstGroup an extension to its contract.
The DfT last year suspended the competition to re-let the 15-year franchise after the mishandling of the award of the West Coast Main Line contract.
The government could now be forced to reimburse the train companies that had bid to run the Great Western service connecting London to Bristol and Cardiff.
Alongside FirstGroup, National Express, Stagecoach, and Arriva, a division of Deutsche Bahn were short-listed for the Great Western franchise.
FirstGroup said it would continue to run the Great Western service beyond its current end date of March 31, 2013 and was in talks with the DfT to extend it for a further two years beyond October 2013.
The bidding process to run the Essex Thameside and Thameslink services were also suspended in the wake of the West Cost main line fiasco.
The DfT said the competition for the 15-year Essex Thameside franchise would be resumed, while the Thameslink, Southern and Great Northern franchise competitions would be resumed with the DfT working towards awarding a seven-year contract.
"These plans mark an important step on the way to restarting the franchising programme, and while I am determined this should happen as quickly as possible we do need time to get this right," transport secretary Patrick McLoughlin said.
Cost-cutting, a lack of governance at Department for Transport and mistakes by ministers contributed to the mishandling of the award of the West Coast Main Line rail, said a parliamentary report into the fiasco published on Thursday.
The bungled West Coast process has so far cost taxpayers about 40 million pounds in compensation to the four shortlisted bidders.
Reporting by Rhys Jones; editing by Brenda Goh