Westminster City Council has reached a £600k settlement with parking services provider Mouchel over the awarding of the UK’s biggest parking contract, Surveyor can exclusively reveal.

The deal follows the decision not to award its £50m parking enforcement contract to the contractor last year.

Instead, the council awarded the contract to NSL Services, in a deal providing more than £10m of savings over four years, when compared to the previous parking contract.

The council - which has stated in does not admit liability - claims if the matter had gone to court, they had a good prospect of success, but when faced with the prospect of multi-million pound payout, a settlement was the only responsible course of action to take.

Mouchel were originally named as the preferred bidder during the initial procurement process for the council’s parking enforcement contract in March 2010.

However, during the ‘cooling off’ period the bidders were de-briefed. It was at this stage that a flaw came to light in the initial contract document, and the council decided to end the original procurement process for its on street parking enforcement.

A new ‘accelerated’ procurement process was subsequently started, with NSL named as the successful tenderer in June 2010.

Cllr Lee Rowley, Westminster council’s cabinet member for parking, said: ‘We are disappointed that Mouchel were unhappy with the way this contract was awarded and that we have been forced to reach a settlement with them, despite the fact that the loss will inevitably impact frontline services.

‘I would like to stress that this decision was not taken lightly. We have not admitted liability and had the matter gone to court we believe our case had a good prospect of success.

‘But when faced with expensive courts costs and the risk of an outcome that could have seen the council having to pay out up to £4million in compensation, we felt a £600,000 settlement was the only responsible course of action to take.’

When contacted by Surveyor, Mouchel refused to comment.