Wolverhampton City Council has agreed to pay £7.1m to Axon Solutions for "transformation work" which was stopped...
after the council ran into financial difficulties.
Axon worked with the council between March and November 2008 on projects that aim to help it save £10m over 10 years.
The council said "mounting pressures on council finances" meant the work had to conclude after just six months.
The two organisations had been working since then to decide an appropriate level of payment for the work already done, and finally came to an agreement in December 2009.
The intervening period was not without controversy. Wolverhampton North East MP Ken Purchase alleged in a parliamentary early day motion that Axon made threats to sue councillors who voted for the remuneration debate to be heard in public.
But council leader Neville Patten said he refuted the allegation "in the strongest possible terms", calling it completely unfounded.
He said the council debate was held in private so it could receive advice from its legal team confidentially
The council said it is still under financial pressure, and will conduct a review of the work to see what can be learnt from it.
Steve Cardell, president of Axon, said, "We recognise that Wolverhampton City Council have faced challenging financial pressures and understand why they couldn't proceed with the work we were doing together.
"We believe that the settlement is fair - balancing the value of the work performed against recognition of the council's limited funds. The work we have performed will be of benefit to the council and we wish them luck with their future business improvement goals."