Both firms will now go head-to-head as the procurement process rumbles on for another 12 months ahead of a contract award in August 2011.

Leader of Sheffield City Council, Councillor Paul Scriven, said: “Choosing the best contractor to undertake this work is crucial and we have to make sure we get it right. We’re looking forward to working with these two bidders over the next few months.

“We realise that this is an uncertain time for those members of staff who will transfer to the chosen contractor.

“We are therefore keen to ensure that the Council appoints a contractor who will not only deliver the project to the standards we require, but will also be a good employer.”

Over the coming months, both bidders will again enter into further dialogue with the Council to refine their bids.

The bidders will be required to submit their Refined Solutions later this year and, once these have been evaluated, the Council will call for Final Tenders.

After a further evaluation process, a Preferred Bidder will be selected. The Preferred Bidder will then begin their mobilisation to ensure that they are ready and equipped to begin working on the contract, anticipated to begin in August 2011.

Between 2011 and 2018, Sheffield’s roads and streetscene will be transformed in a £2bn programme made possible by £674.1m  of Government funding in the form of PFI credits.

to revamp the city’s streets. This is the single biggest allocation of Private Finance Initiative (PFI) credits for any Local Authority scheme. These credits will be paid to the Council with interest as additional grants over 25 years, and provide a total of £1.25 billion of new money for the City.