Several telecoms and Internet firms are preparing bids for the single biggest telecoms contract in the history of the State, worth in excess of £100 million (#127 million) over five years.

The award of the contract to supply and maintain a backbone telecoms and Internet infrastructure for e-Government could have major implications for Eircom.

If a competitor wins out, it would result in a major loss of traffic for Eircom which has multiple contracts to deliver services to public service agencies and Government.

The total contract value is worth almost 10 per cent of Eircom's annual fixed-line revenues, and renewal by Government is considered a likely option at the end of the five-year period.

Several different consortia will compete for the lucrative contract. At a meeting last week in the Department of Finance more than 20 different telecoms and technology firms were briefed on the tender process.

These included Cable & Wireless, Global Crossing, GTS, Compaq, Cara Group, ESB Telecom, Enthropy, Eircom, Colt Telecom, Chorus, Esat and Eircell.

The successful bidder will roll out a network to every geographical area in the State to aid the Government's decentralisation programme to move public-sector employees from Dublin.

The first significant step in the e-Government strategy is expected to go live in late 2001 when a Government Internet portal is launched.

This will offer citizens a single gateway to all Government services. The portal will later be supported by a network of contact centres throughout the State which will act as intermediaries for people without computers.

The successful bidder will be required to offer a wide range of services including fixed-line telephony, mobile telephony, a managed IP service to support data networking between agencies and Internet-access facilities.