Unions are warning of an impending British engineering skills crisis, as yet another major public sector project is set to be awarded to a huge US firm.

The Independent can reveal that three bids involving UK firms have been removed in the running for the £485m, 10-year Environment Agency deal to shore up the River Thames’ flood defences. The contract covers an area from Teddington in west London to Sheerness and Shoeburyness in Kent and Essex.

This leaves Colorado-based CH2M Hill, which is also helping to oversee the construction of London’s Crossrail, and Jacobs, a group from California that part-manages the Atomic Weapons Establishment in Berkshire, in the running to be the Environment Agency’s “delivery partner”.

Increasingly, this type of deal is being snaffled by US firms with strong balance sheets and big project experience. CH2M Hill and US rival Bechtel were recently awarded contracts to run programme management at the £14bn-budget Defence Equipment & Support agency, while the clean-up of Sellafield nuclear facility in Cumbria is led by San Francisco’s URS. CH2M Hill does own British engineer Halcrow, but often flies over experts who have worked on huge projects on the other side of the Atlantic.

Matthew Lay, Unison’s national officer for utilities and environment, said: “One of the concerns that I have over using firms external to the UK is that there is a massive issue of high-end skills: what do these contracts do for the human infrastructure of the country?

“The water industry, for example, has seen a massive loss of skills. If you look at foreign companies, they’re winning good contracts – sure-fire winners – and you’ve got to question whether that means the UK has got its industrial strategy right.”

The other firms that had originally been shortlisted for the Environment Agency contract – which involves improving flood protection walls and is the first in a long line of deals known as TE2100 that will eventually see the replacement of the Thames Barrier – were some of the biggest names in British engineering.

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Mace, which helped oversee the construction of the London 2012 Olympic Park, was part of a team that also involved Surrey-based WS Atkins; London Stock Exchange-listed pair Costain and Capita had joined forces with URS; and construction group Morgan Sindall was working with Dutch firm Grontmij. An Environment Agency spokeswoman said: “We can confirm our shortlist is down to two firms, Jacobs and CH2M Hill. The TE2100 project will be delivered by UK suppliers and contractors.”