A third consortium, the Fusion Alliance, made up of BT, Computer Science Corporation and SchlumbergerSema, has been dropped from the procurement process for the new Aspire contract
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Faced by criticism that the incumbent suppliers - EDS and Accenture - were too entrenched for rivals to dislodge, the Inland Revenue attempted to stimulate competition by paying £9m towards the costs of companies bidding against EDS and Accenture.
It now has to choose between an consortium led by EDS, which is facing a barrage of criticism over IT failings with the tax credit system and at the Child Support Agency, and Cap Gemini Ernst & Young, which has no UK public sector contracts on the scale of the Inland Revenue
The existing contracts to run the nation's tax and national insurance systems are due to expire next year. The follow-up deal will involve about 2,500 staff, serve at least 65,000 desktops, a number of ICL mainframes, and 177 IBM and HP-UX servers.