A £3.5 million contract to run a business start-up service in Northern Ireland is to be terminated following a legal challenge by an unsuccessful bidder.

Invest NI will begin a new, revised procurement process as part of the resolution to a High Court action over the award to a Scottish firm, lawyers confirmed yesterday.

Last September, the two-year contract for running the Go For It service was given to the Go Group, in association with KPMG locally. Enterprise Northern Ireland, which ran a predecessor programme, challenged the handling of the tendering process, claiming inequality of treatment with the rival bidder.

In a case against Invest NI and the Department of Finance and Personnel, it claimed the winning consortium benefited from unfair advantages.

Lawyers for Enterprise Northern Ireland argued in court that KPMG was able to gain an insight into other bidders through its monitoring agent role from a previous programme.

The service, aimed at helping entrepreneurs get started, has been on hold for the last six months due to the legal bid to have the disputed award set aside. But after discussions between the parties, the judge was told today that the issues had been resolved.

David Scoffield QC, for the plaintiff, said: “We ask the case to be stayed on terms endorsed.” Although no further details were given, Mr Justice McCloskey commended both sides for reaching an agreement and saving time and money.

He added that litigants in this type of case were “strongly exhorted to make serious efforts to see if they can resolve their differences consensually”.

Outside the court Enterprise Northern Ireland’s solicitor, Ronnie Robinson of the Johns Elliot law firm, confirmed that tendering will now begin again.

Mr Robinson said: “My clients are very pleased at the outcome.”