The Tees Valley Mayor has criticised Nexus for not handing the contract to build a new fleet of Metro trains to North East firm Hitachi.
Nexus has announced that Swiss company Stadler will manufacture 42 new trains for the network.
Hitachi Rail Europe, which has a factory in Newton Aycliffe, was also being considered for the contract but has missed out on the multi-million pound deal.
Commenting on the announcement, Tees Valley Mayor Ben Houchen said: "This is an absolutely disgraceful decision from Nexus.
"I've been warning people since October that this was going to happen and I said the procurement process should be stopped.
"Instead, the Labour run Tyne and Wear councils sat back, did absolutely nothing and denied everything.
"They have made excuse after excuse as to why they wouldn’t work with a local, world-renowned company right on their doorstep.
"The result of this is not only Hitachi missing out on a significant contract that would have seen trains for the North East, built in the North East, but it has resulted in 250 hard-working, highly skilled local people losing their jobs.
"To add insult to injury, the Tyne and Wear councils have awarded the contract to a firm which won’t even build the trains in the UK.
"It was bad enough that Hitachi had been snubbed and the trains wouldn’t be built in the North East, but this makes the whole process even more outrageous.
"The people at Nexus and the Tyne and Wear council leaders must explain their actions to those workers who are out of work as a result of this ridiculous decision.
"Hitachi is an amazing manufacturing business and I will do everything I can to support this hugely important North East company and local jobs going forward – as it is clear the Tyne and Wear councils have no interest in doing so."
Stadler will be responsible for the maintenance of the fleet for up to 35 years and the construction of a new maintenance depot.
The value of the contract for the supply of the vehicles, the construction of a new depot and maintenance is around £700m.
The company said it will work with more than 30 new supply chain partners in the UK advanced manufacturing, technology and construction sectors, half of them in the North East, creating and securing hundreds of skilled jobs.
After the first images of the upgraded trains were unveiled on Tuesday morning, Transport North East MD Tobyn Hughes said Stadler had won “fair and square”.
Coun Martin Gannon, leader of Gateshead Council and chair of the North East Joint Transport Committee, added: “Ben Houchen has made his political points. What I am asking him now is to cease scoring political points.
"Come and help us, work with us for the benefit of not just the people of Tyne and Wear but for the Tees Valley as well.”
Mr Houchen has been embroiled in a bitter row with Metro operator Nexus and the Labour leaders in Tyne and Wear for months, after it emerged last year that Hitachi was likely to miss out on the deal.
Coun Gannon said that Metro’s bosses had a duty to deliver what was best for its passengers, adding: “We have worked within the legal constraints.
"We have to ensure openness and transparency and fairness. We advertised to the world and asked people to bid.
“We have to be fair to everyone, Hitachi included.”
It was announced earlier this month that Hitachi would be cutting 250 jobs in Newton Aycliffe, though Nexus says it has reassurances that the decision was in no way connected to the Metro contract.
Tory rail minister Chris Heaton-Harris said: “It is a procurement process that has been run locally.
"Government has just facilitated that by providing a third of a billion pounds in cash.
"We didn’t run the procurement process, we just want to invest in the Metro service but we know these things are best devolved. Those powers were used by local people to choose this company.
“This will guarantee hundreds of jobs in the supply chain and Stadler obviously want to commit to the North East with jobs to service their new trains.
"When you have devolved Government you get devolved decisions, we support them with cash from Central Government.”
