The news came one day after a spokesman for bid organiser, Galileo Joint Undertaking, had said the winner would be announced Tuesday.

But the commission nonetheless stressed that the program was on schedule.

"The European Commission has noted the Galileo Joint Undertaking's decision to start negotiations with the two remaining candidates on the concession agreement," the commission said in a statement.

"This new stage in the selection procedure is in line with the established timetable," it added.

The two consortia include iNavSat, which comprises the European Aeronautic Space and Defence Company (EADS), Thales of France and Inmarsat Ventures of Britain.

Its competitor, Eurely, was formed by the French group Alcatel and Italian Finmeccanica along with Aena and Hispasat of Spain.

Holding simultaneous negotiations will allow the European Union to "improve the two candidates proposals, to the greater benefit of the Galileo project," the commission statement quoted vice-president Jacques Barrot as saying.

Galileo officials had concluded "there was very little difference" between the competing bids, it added.

"At this stage it was impossible to decide between the two, so now negotiations on the concession agreement have to be opened with the two consortia simultaneously."

The Galileo system will "lead to the development of a new generation of universal services in areas such as transport, telecommunications, agriculture and fisheries," the statement said.

"Unlike the two existing systems, the United State's GPS and Russia's GLONASS, which are military systems, the Galileo programme will be managed and supervised by civilians," it added.

EADS said it was "very disappointed" by the commission's move to postpone a decision on the contract, warning the delay could increase the cost of the project.

"We believe that the 18 months of intensive negotiations that have just been completed should have been sufficient," an EADS spokesman said.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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