Lothian and Borders police in Scotland are investigating Edinburgh council’s £180m schools contract after a senior council employee leaked sensitive bidding information to staff at Balfour Beatty.

Two Balfour Beatty managing directors immediately alerted the council’s management who contacted police. The council employee was sacked immediately.

Balfour Beatty was up against a Laing O’Rourke consortium for the contract and it is understood that Balfour Beatty staff were leaked information regarding the Laing bid as part of the Axiom education consortium.

Balfour Beatty has now offered to withdraw its bid, under the consortium name of Transform which is a partnership with Innsfree, from the tender process. The council has accepted this offer, and this now leaves only one consortium in the bidding process, a move that could delay the scheme by more than a year.

The council said that it was now scrutinising the legal, financial, and contractual issues to find the best way forward. It said: “The paramount aim is to build the new schools as quickly as possible.”

The council added it would assess the need for a further inquiry following the police investigation.

With a capital investment value of £180m, the “Building Achievements” project is the largest current education PPP in Scotland. It is not known whether the unsuccessful bid of Amey and Robert McAlpines’ E2 Schools partnership will be asked to retender.

Edinburgh council chief executive Tom Aitchinson said that the council had strict standards for managing tenders and staff. He said: “As soon as this was brought to our attention we took decisive action and called in the police immediately.”