The North East Procurement Organisation has been forced to rip up previous bids after legal advice warned the whole award process was vulnerable to challenges from failed bidders.

Councils in the north east had hoped to make big savings and reduce the time to market for appointing contractors, saving £35m over the four-year term on new building work in the region.

But procurement chiefs said big variations in pricing schedules submitted by contractors have made the whole process difficult to evaluate, despite many attempts to clarify bids.

Now they are rewriting bid documents to precisely spell out how mini bid competitions will be conducted under the framework, which is expected to be used for around £90m of projects each year.

Prequal submissions from more than 80 firms were received way back in April 2011 with around 40 moving to the more detailed evaluation and award process, due to complete in April this year.

But the bid race has dragged on and now Gateshead Council, which is handling the procurement race, has told contractors they will have to rebid and submit new PQQs.

A statement to contractors from Gateshead council said: “The Council does appreciate the time and effort spent in preparing and bidding for a procurement of this nature and trusts you appreciate that the council has no alternative but to arrive at the decision to terminate the process.

“The evaluation of price was much more difficult than envisaged and there had to be several rounds of clarifications with tenderers.

“This resulted in the conclusion that prices could not be compared on a like for like basis, legal advice was sought on the likelihood and nature of a challenge from an unsuccessful tenderer.”

The council said a new prequalification race would start before the end of the year. It said it was going right back to inviting PQQs because the standing of many firms will have changed over the last 18 months.

In the meantime, some projects that would otherwise have been tendered under mini-competitions under the framework will need to be tendered on a standalone basis.