Aim, the company that runs the computer systems for the PAP town councils, announced on Wednesday that it would not take part in the latest tender exercise, which closes next Monday.
In a short statement, Aim said: "Given that Aim had helped prepare the tender documents, it decided not to participate in the tender."
The PAP town councils recently put out a tender calling for a company to run their computer systems, as the contract signed with Aim expires on April 30.
Aim, or Action Information Management, is a PAP-owned company.
It has been at the centre of a controversy which emerged last November after Workers' Party chairman Sylvia Lim said that Aim's move to terminate the lease of its software in 2011 had affected the Aljunied-Hougang Town Council's performance in a government review.
Both sides then locked horns over who had terminated the software lease.
In its statement on Wednesday, Aim also said that it has been helping the PAP town councils to migrate from the obsolete software to a new generation software.
"As part of its support to the town councils in system migration, it has amongst other things, helped the PAP town councils prepare the documents for the current tender.
" The objective of the tender is to select a software vendor to develop the new generation software for the town councils and then to maintain the system for a number of years," it said.