Mistakes over the West Coast rail franchise should not have been made and are very regrettable, Transport Secretary Patrick McLoughlin told MPs on Wednesday.
The implications of the flawed franchise process were "very serious" for the Department for Transport (DfT), he told the House of Commons Transport Committee.
He apologised to taxpayers who are now facing a £40 million bill following McLoughlin's decision to scrap the West Coast franchise process following the finding of serious errors by the DfT.
He was appearing before the committee with his department's Permanent Secretary Philip Rutnam following the publication of initial findings of an independent inquiry into what had gone wrong with the West Coast bidding process.
The DfT, under the leadership of the then transport secretary Justine Greening, had decided in August to award a new 13 year West Coast franchise not to Sir Richard Branson's rail company Virgin Trains but to rival transport company FirstGroup.
Sir Richard, describing the bidding process as "insane" launched a legal challenge and it was in preparing its defence that the DfT discovered flaws with the bidding process.
McLoughlin then cancelled the bidding, laying the blame on DfT officials. Three DfT civil servants have been suspended.
McLoughlin told the committee: "Mistakes which were made should not have been made. It is very regrettable and very serious for the department."
He said he would like to apologise again taxpayers "who have a right to expect better".
On Monday this week, Mr McLoughlin published the initial findings of an independent report he set up to look into the West Coast bidding affair.
Led by senior business figure Sam Laidlaw, the report said the DfT had been "aware of a lack of transparency" in an aspect of the franchise process but had decided to continue "and to accept the risk of a bidder challenge".