Government plans to recruit a private consortium to buy military equipment are to be formally axed after all but one external bidder pulled out.
Defence Secretary Philip Hammond is examining other options - which could still involve the private sector despite the failure of the tendering process.
The Ministry of Defence (MoD) hoped to outsource the procurement of equipment to a private organisation under a GoCo ( Government-owned, contractor-operated) arrangement.
But Mr Hammond told MPs last month that the withdrawal of two of three interested parties made it "more challenging" and that he was reviewing whether to proceed.
He said he would examine "whether it is in the public interest to proceed with only a single commercial bidder and an internal option, or whether alternative approaches should be considered".
Options include bringing in a private-sector partner to help the MoD with efficiency.
MoD chiefs have been heavily criticised for wasting huge sums of taxpayers' cash on expensive botched equipment deals.
An MoD source said: "No final decisions have been made but it is looking increasingly likely that the Defence Secretary will end the commercial competition.
"If that were to happen, we would then announce our alternative plans for reforming defence acquisition.
"It is clear that the status quo is not acceptable and reform is needed to bring in private sector skills and experience."