The National Audit Office (NAO) has revealed it warned the government last year that it could face a bill of up to £20 million if it sued over the process of handing out no-deal Brexit ferry service contracts.
The Department for Transport, led by transport minister Chris Grayling, awarded contracts to three providers, Brittany Ferries, DFDS and Seaborne Freight, worth a combined £100m.
The NAO said the Department's accounting officer believed there was a "high likelihood" of a legal challenge over the procurement process. Eurotunnel received a £33m settlement from the government in March because it was not offered the opportunity to bid for the contract, despite having operated a ferry service in the past.
The DfT claimed a full procurement process was not possible because of "reasons of extreme urgency brought about by events unforeseen by the contracting authority".
Responding to the NAO's revelation that it warned the government of the likelihood of legal action, the DfT said it had "carefully considered the legal risk at all stages of the procurement".
Chris Grayling has faced huge criticism over the situation, particularly after Seaborne Freight's £14m contract was cancelled after its backers pulled out. Soon after, it emerged the company was awarded the contract despite not actually having any ferries. The contracts with Brittany Ferries and DFDS were then cancelled earlier this month, costing the taxpayer an estimated £50m.