Cook mostaccioli according to package directions; drain and set aside.
In a large saucepan, brown ground beef, onion and garlic; drain.
Stir in tomatoes, tomato sauce and paste, mushrooms, water, salt, sugar, basil, pepper and bay leaf. Bring to a boil; reduce heat and simmer for 30 minutes, stirring occasionally. Remove bay leaf. Stir in mostaccioli.
Spoon half into a 13 x 9 x 2-inch baking dish. Sprinkle with mozzarella cheese; layer with remaining meat mixture. Sprinkle with Parmesan cheese. Cover with foil.
Bake at 350 ° for 30-35 minutes or until heated through.