The firm handed the £170 million HS2 high-speed rail contract has pulled out of the project.
American-based CH2M was chosen by HS2 Ltd last month to deliver Phase 2b of the £55.7 billion high speed rail line, running from Crewe to Manchester and Birmingham to Leeds.
But the contract signing was delayed as HS2 Ltd was reportedly investigating concerns from third-placed bidder Mace that there may have been conflicts of interest.
CH2M has been involved with HS2 Ltd since 2012 and was awarded a £350 million deal to develop Phase 1 of the line from London to Birmingham.
Mark Thurston, HS2 Ltd's new chief executive, is a former CH2M employee, as was his temporary predecessor Roy Hill.
It has been reported that dozens of CH2M employees are also on secondment to HS2.
John O'Connell, chief executive of the TaxPayers' Alliance think-tank, claimed "the revolving door between HS2 Ltd and CH2M never passed the smell test" and "serious questions were rightly raised" around HS2 appointing staff from one of their contractors.
An HS2 Ltd spokesman said: "As they have announced, CH2M have decided to withdraw from the Phase 2b Development Partner bid process, a decision which we welcome."
He added that HS2 Ltd will now open discussions with the runner-up in the bid process, Bechtel.
A Department for Transport spokesman said: "This is a matter for HS2 Ltd. There are strict rules around procurements and we expect all proper procedures to be followed."