Greater Manchester has terminated its smart ticketing contract with Atos over 'considerable delays' in the rollout of the flagship scheme.
Transport for Greater Manchester (TfGM) and Atos mutually ended the contract to design, build and operate the 'get me there' smart ticketing scheme despite the system already being used by 500,000 local people.
The firm is now delivering 'substantial compensation' to TfGM to cover the cost of the debacle.
The revelations should leave ministers and council chiefs alike red faced as smart ticketing had been heralded as a centre piece for the Government's plans to develop a Northern Powerhouse.
TfGM today emphasised its commitment to delivering a smart ticketing scheme and said it would now be looking to continue development under alternative suppliers.
In a joint statement published on their website, TfGM and Atos said: 'TfGM contracted Atos in 2012 to design, build and operate a smart ticketing system for Greater Manchester to be rolled out initially on Metrolink and with options to roll the system out subsequently to bus and rail.
'Although the system is currently operational for use by our 500,000 concessionary card holders, after a considerable period of delay it has become clear that Atos cannot deliver the smart ticketing system as contracted.
'Therefore, the parties have decided that it is in their best interests to agree to a mutual termination of the contract, on commercial terms, the details of which, remain confidential between the parties, but which provide substantial compensation to TfGM in respect of the costs incurred and which will enable TfGM to develop a smart ticketing system with alternative providers.
'Atos are collaborating with TfGM to ensure that the existing services are maintained and transitioned to new providers.'
A TfGM spokesperson said: 'Given TfGM's commitment to deliver an integrated smart ticketing scheme, and with the opportunities afforded to us by the forthcoming Bus Bill, which will allow the mayor to set fares and to franchise buses in a controlled way from 2017, it is only right that TfGM re-thinks its approach to the get me there scheme to ensure that it is flexible and fit for the future.
'This has allowed TfGM to bring in a range of experts to look more closely at just what customers want and how we expect their needs to change.
'Therefore, while we continue to run the existing Metrolink scheme for our 500,000 concessionary card holders, we will now look at all possible options to deliver the best possible outcome for customers as we move towards a far more integrated world class transport.'