Washington ? New Mexico Gov. Bill Richardson abandoned his nomination to become commerce secretary under pressure of a grand jury investigation into a state contract awarded to his political donors — an investigation that threatened to embarrass President-elect Barack Obama.

Richardson insisted he would be cleared in the investigation and Obama stood by the governor as an “outstanding public servant.” But both men said it has become clear that a grand jury probe would not be finished in time for Richardson’s confirmation hearings and could keep him from filling the post in a timely matter.

Richardson’s withdrawal was the first disruption of Obama’s Cabinet process and the second “pay-to-play” investigation that has touched Obama’s transition to the presidency. Obama has remained above the fray in both the case of arrested Illinois Gov. Rod Blagojevich and the New Mexico case.

A federal grand jury is in-vestigating how a California company that contributed to Richardson’s political activities won a New Mexico transportation contract worth nearly $1.5 million. Richardson said in a statement issued by the Obama transition office that the investigation could take weeks or months but expressed confidence it will show he and his administration acted properly.

Obama spokesman Robert Gibbs said he expected a new commerce secretary to be nominated soon but didn’t have a timetable. Gibbs said the problem with Richardson’s nomination wasn’t a matter that those tasked to look into his background missed something.

“I think the totality of our Cabinet picks is impressive and I think our vetters have done a good job,” he said Sunday night.

A senior Obama adviser said Richardson gave assurances before he was nominated last month that he would come out fine in the investigation and the president-elect had no reason to doubt it. But as the grand jury continued to pursue the case, it became clear that confirmation hearings would have to be delayed for six weeks or even longer until the investigation was complete.

Aides to both men insisted Richardson made the decision to withdraw and was not pushed out by Obama. But one Democrat involved in discussions over the matter said transition officials became increasingly nervous during the last couple of weeks that the investigation was a bigger problem than Richardson had originally indicated.