The Home Office has agreed to pay just £2m in compensation to the three consortia bidding to build the department’s new headquarters.

This is £4m less than they asked for.

The three teams, which are led by Bovis, Jarvis and developer Godfrey Bradman, claimed compensation in April when the Home Office asked them to rebid for the £60m private finance initiative project three years after it was launched.

One project insider said: “The Home Office will give £800 000 each to the Jarvis and Bovis teams and £400 000 to the Godfrey Bradman team.”

The difference in payments is a result of the Jarvis and Bovis teams having to scrap their original designs, which involved decanting 1500 Home Office staff into temporary offices and redeveloping the Queen Anne’s Gate headquarters.

These teams have now started fresh designs for a new building, rumoured to cost £120m, on the site of the DOE’s former headquarters at Marsham Street.

The Bradman-led team is receiving less compensation because it did no work on a redesign of Queen Anne’s Gate; its original submission was to move to Marsham Street.

Property developer Land Securities, which owns the Queen Anne’s Gate building, is set for a windfall. The Home Office will have to pay it between £70m and £100m to get out of its lease.

The bidders are waiting for the Home Office to ask for best and final offers next month. A final decision on the winning bid will be made early in the new year, a project insider said.