MPs this week demanded to know why the government did not sue Laing over delays and cost overruns on the British Library in London.
The House of Commons public accounts committee is questioning civil servants at the Department of National Heritage (DNH) as part of an investigation into the project.
Conservative MP Richard Tracey asked why the government did not try to prove
negligence against Laing Management, the construction manager since 1984.
Hayden Phillips, the chief civil servant at the DNH, said it had considered the issue carefully, but decided on the advice of lawyers that it would not have a sound case.
He said the department would have faced increased costs for arbitration and litigation and more delay.
He said: In many other respects we were not dissatisfied with Laings performance and, given the fact that others had responsibility, we came to the conclusion we did.
But Mr Tracey said a contractor was being allowed to get out of its responsibilities.
Labours Mike Hall asked why no action was taken when Laing was paid 38 million and had not achieved what it was paid to do.
Mr Phillips said designers, the former Property Services Agency and electrical contractor Balfour Beatty also shared responsibility.
The DNH told the committee part of the problems were caused by divided responsibilities for the project before it took over in 1992. But the main causes were the installation of damaged electrical cabling and defective book shelving.