A cab company at the centre of a controverisal transport deal for disabled children has failed to renew its main contracts.

In September 2009, Olympic South Ltd was awarded a £6.5million contract to ferry disabled children to and from school.

It emerged that Sutton Council’s former transport officer Michael Lawrence had advised Croydon on the contract and then left the authority to take up a job with Olympic South, a Merton-based cab company, shortly afterwards.

A District Auditor investigation found “significant weaknesses” in the tendering process forcing the council to re-tender all 13 of their contracts late last year.

In a secret meeting two weeks ago, council members decided not to award any of the main transport contracts to Olympic South although they have been given a contract to cover some of the cab routes out for tender.

Bus companies were invited to submit their bids to cover the transport routes electronically, although the deadline was extended for 24 hours.

Council officers insist this was because of technical problems and said no bids were submitted after the original deadline.

One member of staff Peter Storey, Croydon council’s procurement manager, has resigned following the matter. He was responsible for recommending which companies should be awarded transport contracts.

And another member of staff, Chris Sheppard, was suspended from work for a period of time, but returned to the council.

The District Auditor investigation found that council officers had failed to check whether one contractor had appropriate insurance cover and found non-compliance with the evaluation of the tenders.

Other high priority issues raised included interim payments made to contractors and variations of a contract made by officers who did not have appropriate delegated authority.

In October 2009 auditors expressed doubt Olympic South could continue as a going concern.

In the published accounts for the transport firm dated October 2009, auditors notes the company’s liabilities exceeded its total assets by £79,571.

Henry Bilinski, director of Olympic South, has continuously refused to comment.

Despite the controversy, Olympic South continues to transport children until April.