It is the latest in a string of deals that have turned sour, and comes after the company introduced new procedures to vet contracts and help stem losses of millions of pounds.
The contract, to build a light rail system in the West Midlands, was awarded by the area's transport authority, Centro. Bob Tarr, its director- general, made a stinging attack on Taylor Woodrow.
An internal letter from Mr Tarr, seen by the Independent on Sunday, calls Taylor Woodrow's decision 'extraordinary'. It adds: 'Their tactics ever since their selection have been to try and wriggle out of the heads of terms on which they were selected. Maybe Taylor Woodrow thought we were going to be naive or a soft touch when it came to negotiating.'
Taylor Woodrow and its Italian joint venture partner Ansaldo Trasporti set up Centram to build and run the railway between Birmingham and Wolverhampton. Centram signed the contract on 20 June, but Taylor Woodrow refused to endorse it three days later.
A spokesman for Taylor Woodrow said his company was simply unable to arrange a board meeting to endorse the agreement before the deadline expired last Monday.
Ansaldo said it was was consulting legal advisers about compensation, but did not want a public row with its former partner. Mr Tarr's letter says Ansaldo 'is absolutely furious'.
Centro said it had not decided whether to take action against Taylor Woodrow. Compensation could be substantial, as Ansaldo is now out of the running and Centro must re- open negotiations with a new consortium, delaying the rail project.
Taylor Woodrow, which sank pounds 66.1m into the red last year, set up an 'inner cabinet' to scrutinise new contracts, after a run of bad luck last year. But it appears that the railway deal never got this far. 'It is very strange and cock-eyed,' one building analyst said. 'It does not instil confidence.'Reuse content