Barrett subsidiary Wilson Bowden was awarded the scheme in December last year but rival bidder Sultan Properties, which owns Rochdale's Wheatsheaf Shopping centre, challenged the decision on the back of two recent legal rulings on EU Procurement law.
The rulings, which could set a precedent for similar legal challenges, upheld the need for all award criteria to be disclosed in the OJEU notice.
Although both rulings were made after the Rochdale scheme went to tender the council was advised these cases would be considered in any legal proceeding.
Explaining the councilвЂ™s decision to retender Council chief Roger Ellis said:
"A drawn-out legal dispute would have led to significant delays to the town centre redevelopment, as well as substantial costs to the public purse."
Alan Black, a director at property consultants DTZ and an adviser to the council, told CJ Rochdale council had rigorously followed procurement rules as interpreted at the time. He said: вЂњIt is a very unfortunate case and hopefully a one-off but obviously a precedent has now been set.вЂќ
Black added: вЂњWe hope other developers will be interested in bidding but in the current climate who can be sure. This is a big scheme, running over a period of years and there may also be a mistaken perception that the two bidders already involved will be automatically selected.вЂќ
Stephen Sellers of law firm Wragge said councils would have to take much more care in following EU procurement rules when tendering for similar regeneration projects. "This level of detail has previously only been seen in the procurement of service and PFI contracts," he said.
Wilson Bowden were unavailable for comment.