Somerset County Council was within a week of achieving financial close on its £600 million Building Schools for the Future deal when the plug was pulled by education secretary Michael Gove.
Schemes which reached financial close will be honoured by the Coalition, while schemes which had reached preferred bidder status have the chance of having only their sample schools built at best.
Councillor John Osman said Somerset County Council’s bid with Bam Construction had attempted to rush through to financial close before the expected announcement, but had fallen just short.
He said: “We were just waiting for Partnership for Schools and the Treasury to give the final sign-off. We were expecting it within a week, so this is a huge blow.”