Andersen, the Danish consultancy firm, has won the contract to evaluate the third mobile phone licence, despite overspending by £84,000 for work on the previous licence two years ago. The contract has been awarded by the Office of the Director of Telecommunications Regulation.

The selection of Andersen has caused some surprise in industry circles because of what happened regarding the previous licence.

Andersen assessed the applicants for the second GSM licence in 1995. Its overspending was questioned by the Comptroller & Auditor General's (C&AG) office and commented on in detail in his annual report.

The company, which was one of six short-listed, will run the competition for the third licence, known as the DCS-1800 licence.

Details of the competition are expected to be released next week.

Andersen was one of 21 firms who applied to run the competition for the contract for the second licence, which was eventually awarded to Esat Digifone.

The tenders varied from £190,000 to £932,000. Andersen submitted a fixed fee of £297,450 and expenses of up to £30,000. The final bill came to £411,574.

The contract was awarded by the then Department of Transport, Energy and Communications which had agreed expenditure of up to £17,215 for additional items.

After the applications for the GSM licence were received, it became clear that the company would have difficulty completing the project to the required standard within the £297,450 limit.

Andersen also said it had a difficulty because it had made an "erroneous exchange rate assumption" in its original tender and since then there had been unfavourable rate movements. It was told the exchange rates movement was its own problem.

The consultants also mentioned the issue of additional payment for certain additional items. It also cited additional workloads.

The Department told the C&AG that it believed and continues to believe that the extra items related to work which could "only be reasonably considered to be within the cope of the evaluation agreed with the company". The Department also felt that it could not have confidence in the consultants' evaluation if the payments were not revised. It also considered engaging a new consultant to carry out the project.

The Department sought legal advice from the Attorney General who advised against severing relations. A new price was subsequently negotiated.

Last night the regulator's office declined to comment.

A spokesman said it would not confirm or deny that the contract had been awarded to Andersen.

He said the regulator's office would be making a statement on how the competition will be run early next week.