Citing differences over money, the McAuliffe administration has given a private consortium notice that its contract with the state to improve U.S. Route 460 will be terminated.

Transportation Secretary Aubrey Layne announced the latest development in the Route 460 saga at a Commonwealth Transportation Board meeting on Wednesday.

After 45 days of unsuccessful negotiations between the state and US 460 Mobility Partners, the termination notice has started the clock ticking on 60 days of mediation, Layne said.

If that mediation is futile, a December 2012 agreement signed by the Virginia Department of Transportation, Mobility Partners and the Route 460 Funding Corporation — established to sell bonds for the project — would be terminated.

The original contract was for construction of a new, limited-access four-lane toll road running 55 miles between Suffolk and Petersburg, at an estimated cost of $1.4 billion.

Pitched by the McDonnell administration as a much-needed evacuation route for Hampton Roads and northeast North Carolina, an economic stimulus for Western Tidewater and a strategic military asset, the project was pushed forward without a environmental approval from the U.S. Army Corps of Engineers.

According to the Southern Environmental Law Center, the wetlands impact would have been unprecedented for a Virginia transportation project.

Citing these concerns, Gov. Terry McAuliffe suspended contract spending on the project in one of his first major public policy decisions after taking the oath of office in January 2014.

At the beginning of 2015, VDOT, the Corps and the Federal Highway Administration outlined a new plan they deemed environmentally feasible. That plan involves a new four-lane road stretching about 12 miles from Suffolk to west of Windsor, and thereafter improving the existing road a further five miles, including a new bridge across the flood-prone Blackwater River.

Officials had hoped to keep Mobility Partners on board. But according to Layne, negotiations unraveled over how much of what has already been paid to the consortium should be applied to the new plan if it goes forward.

“We could not reach agreement,” Layne said. “We think there’s a substantial amount of money due to the commonwealth,” or the commonwealth should be due credit. We tried to bargain in good faith. Our position is they owe us money. Right now, we have paid them $250 million.”

Layne said the commonwealth “hopefully” wouldn’t owe Mobility Partners anything else if the contract is terminated. “I’m sure they have a much different view, and that will end up in litigation if we can’t resolve it,” he said.

Layne said VDOT would press ahead. With assurance from the U.S. Army of Corps of Engineers that the new plan would receive an environmental permit, public outreach to solidify it can continue unabated, he said.

If the contract is jettisoned, VDOT will start a new procurement as either a design-bid-build or a design-build project, according to Layne.

Which of those two procurement options the commonwealth opts for would depend on the amount of design work required to obtain the Corps permit, he said.

“If we had to design 70 or 80 percent, we’d go ahead and design it all then bid it out,” Layne said. “If we didn’t need to design but a small percentage, it may make more sense if we leave that up to the contractor.”

The new procurement would need to pass through a prioritization process for projects funded by the Commonwealth Transportation Board that wasn’t in place during the previous procurement.

“Once that’s completed, we will make a decision whether or not to fund that project — the Commonwealth Transportation Board,” Layne said.

“There’s ample money still left in the funding stream for us to move forward.”

Tolls would not be a part of the project, he said.

According to Layne, the state has been aggressive in its attempts to recover for taxpayers as much value as possible under the existing contract.

A new procurement would benefit taxpayers, he said, adding, “Significant competition to build the road will, I believe, drive prices down.”

According to the Southern Environmental Law Center’s Trip Pollard, the new road ahead for the project, which he has previously referred to as a boondoggle, “should help ensure a thorough review of the substitute 17-mile proposal … so we don’t throw good money after bad.”

But the new plan still would have a substantial wetlands impact and cost taxpayers up to $425 million, “a hefty sum to improve a lightly-traveled corridor — while doing nothing to address safety and flooding problems on the rest of the corridor,” Pollard added.

“Now that the state is out from under a contract, we urge the McAuliffe administration to take a clear-eyed look at what improvements to the corridor really make the most sense.”

According to spokeswoman Diana Klink, the city of Suffolk “looks forward to receiving additional information from VDOT regarding the details of this project.”

“We also look forward to continued dialogue with VDOT throughout project development with opportunities to discuss and offer input regarding impacts to local traffic and existing land uses along this corridor,” she added.