THE construction company Sir Robert McAlpine dropped its multi-million-pound law suit over the Holyrood building scandal yesterday.
McAlpine was suing the Scottish Parliament and the Scottish Executive for 4.31 million in "lost profits" after the firm failed to win the main construction management contract to build the parliament building.
The Scottish Parliament announced yesterday it had reached an out-of-court settlement with McAlpine.
Both sides agreed to pay their own legal fees which, for the parliament, amount to about 150,000.
The settlement represents a major victory for the parliamentary authorities. There could have been a huge compensation bill had McAlpine won the case.
Although the taxpayer will now have to fund the 150,000 necessary to pay the parliament's legal team, that bill is a fraction of the millions that might have had to be paid out had the case been lost.
McAlpine argued that the tender process that awarded the main construction contract to Bovis Lend Lease was flawed and broke European rules.
Bovis submitted the highest bid for the contract and was initially eliminated from the tender process. But it was mysteriously reinstated and went on to win the contract.
No-one who gave evidence to the inquiry into the Holyrood fiasco was able to explain adequately why this had happened, and McAlpine, which submitted the lowest tender, then went to court claiming that European rules had been broken.
The parliament argued that McAlpine submitted its suit too late and should be "time barred" under European rules requiring such actions to be taken within three months of evidence emerging of a problem.
It is understood that McAlpine's legal team came to the conclusion that the "time bar" argument was proving a hard one to fight and agreed to withdraw from the case.
George Reid, the Presiding Officer, said: "Achieving a settlement of this case was clearly in the public interest, given the potential costs.
"I am therefore delighted that we have been able to reach this agreement with McAlpine."
The collapse of the case represents the penultimate stage in the long-running Holyrood building saga, which started in 1997 and resulted in a building 380 million over budget and three years late.
The European Commission is still investigating the controversial award of the construction management contract to Bovis and that could lead to the UK being asked to appear before the European Court of Justice.
Fergus Ewing, an SNP MSP and a consistent critic of the building, said the end of the McAlpine case represented "good news and bad news".
He said: "It's good news that the taxpayer will not have to pay a heavy price for the negligence of Scottish civil servants.
"But it is bad news in that the biggest unanswered question which has come from the Fraser Inquiry, the award of the contract to Bovis, has still not been resolved."