Enterprise NI have warned 300 jobs could be at risk if it loses the contract for Invest NI's start-up business programme.
It follows last week's news that the organisation, which represents Northern Ireland's 32 local enterprise authorities (LEAs), lost a tender to decide the provider of Invest NI's business start-up programme. Scottish company The GO Group, in partnership with the Northern Ireland offices of KPMG was the winning bidder.
Addressing yesterday's DETI committee meeting, representatives from the board of Enterprise NI said there were "significant and serious flaws" in Invest NI's tender competition which highlighted problems in all of Northern Ireland's procurement processes.
Sandy Smith, the chairman of Enterprise NI, said: "We are frankly astounded at the outcome of the competition tender - that we were so far away from winning the bid."
Until this latest tender process, Enterprise NI had delivered the programme - formerly known as the Go For It programme - through its network of LEAs for 20 years.
Mr Smith said the organisation felt "obliged" to launch its legal challenge against the decision.
He said: "There is disappointment in the manner in which this has been handled. We believe it is a very flawed process."
He said that the documentation relating to the process revealed what Enterprise NI considered "significant and serious flaws" in the decision-making process.
The board members expressed concerns at the effect on communities, saying the LEAs "reinvested in local communities and not in shareholders".
The business start-up programme is due to begin at the end of September, but the challenge to Invest NI's decision will have to be heard before the contract is officially awarded to a provider, possibly delaying the scheme.
They rejected the suggestion that LEAs were "too dependent" on the programme, describing it as "a key entry point" to the other services and schemes offered.
Gordon Gough, chief executive of Enterprise NI, said there were 300 staff currently employed at Northern Ireland's enterprise agencies.
He told the committee: "Jobs will be lost at those centres. There will be job losses across Northern Ireland."
DFP said it cannot comment on this competition until the contract has been awarded.
The number of local enterprise authorities that Enterprise NI represents