May Gurney won the £35m-a-year highways maintenance contract from Norfolk County Council in 2004 and has worked-through potential break clauses after five and eight years.
The deal comes to an end in April 2014 and May Gurney was told it will not be in the race for the new five-year contract.
The contractor launched an immediate appeal against the decision.
But it confirmed today: “May Gurney has been notified by Norfolk County Council that the Company’s formal appeal against the decision not to select it for the short list in relation to the re-bid of the Council’s highway and related services procurement contract A has been rejected.
“Whilst disappointed, May Gurney remains fully committed to continuing to deliver a quality service under the terms of the current contract.”