Jarvis's financial crisis has claimed its first casualty after Fife Council ditched the ailing firm as preferred bidder for its£50m schools investment programme.
'Uncertainty' created by Jarvis's extensive debt write-offs and the recently announced structural review of its accommodation services division (LGC, 6 August) led to the decision, said Fife.
It is understood that Jarvis suggested a subcontractor to carry out its part of the construction work, but that the council rejected the proposal because the introduction of a company with no prior involvement in the project would delay work further.
Fife strategic manager David Martin said there had been 'mutual agreement' that the council would reopen negotiations with Canmore and Emblem, the two consortia initially shortlisted alongside Jarvis.
'The council wishes to continue to work with Jarvis to achieve Jarvis's orderly exit from the project and, if practical, the use of the designs for which planning permission has been obtained,' he said. Mr Martin added that the council remained committed to the building of the 10 schools 'irrespective of the change in partner'.
A spokesman for Jarvis, which declared a pre-tax loss of almost£250m, compared to a profit of over£62m the previous year, described the decision as 'disappointing', as the company's bid had been selected as offering best value for money.
'However, it became clear that although good, positive working relationships have been maintained throughout, we could not finally reach agreement on remaining key issues,' he said.
The contract, for which Jarvis was appointed preferred bidder four months ago, was expected to be worth£174m over 25 years (LGC, 20 April).
Jarvis is preferred bidder for schools building projects with Manchester City Council, Kirklees MBC and Norfolk CC, with a combined lifetime value of almost£500m.