Dublin City Council has said it is continuing to honour a multi-million euro contract linked to the Poolbeg incinerator that the European Commission has called on the local authority to terminate.
The EU Commission had expressed concern over the council's contract for client services and public relations at the proposed incinerator, in which spending over-ran by more than €20m.
The contract was originally estimated at €8.3m but ended up costing around €30m.
Dublin City Council initially declined to respond to queries relating to the contract.
However, in a statement released to RTÉ's This Week, the local authority said that it does intend to terminate the contract but that it had not yet done so.
The Council said it had informed the EU Commission of its intention to terminate the contract but that it has also proposed delaying this as there were ongoing matters that the council believed the team of consultants were required to advise them on.
In a letter written by the EU Commission in April of this year - and seen by RTÉ - the Commission described the contractual arrangement as an "illegal situation".
Spending by the Council on “client services and public relations” accounts for around one-third of the €90m spent on the stalled Poolbeg project to date. The incinerator remains unbuilt despite being granted planning permission in 2007.
The letter calling for the termination of the contract was written by a lawyer at the EU Commission to two Sandymount residents, Joe McCarthy and Valerie Jennings. Mr McCarthy and Ms Jennings have made a wide-ranging complaint to the Commission about procurement aspects of the Poolbeg incineration project.
The letter details the view of the EU Commission's internal market and services directorate that the contract appeared to have been modified in a manner which did not conform with EU law.
The Commission's letter states it raised the matter with the council but that the local authority "did not address all the concerns of the Commission services".
It continues: "Therefore, the Commission services called upon the Irish authorities to terminate the contract", according to the letter, dated 2 April of this year.
Later in the letter, the Commission described the contract as an "illegal situation" but it said that this alleged illegality would cease once the contract was terminated.
The Commission does not have the legal power to force a local authority to terminate any contract.
According to the letter, the Commission has largely dismissed other complaints made by the local Sandymount residents, who also complained about alleged changes to the size and scale of the 600,000 tonne incinerator and the involvement of US waste giant Covanta as the local authority's joint partner in the project.
A spokesman for the Commission said that they could not comment on matters that were the subject of on-going investigation. The Commission said they continue to be in dialogue with the council.
The client representative and public relations contract between RPS and Dublin City Council was also examined last year by the Local Government Audit Service, which found that the contract was not re-advertised even though it exceeded 50% of its original 2005 tender value.
"The continued appointment of the client representative should have been reviewed as far back as 2005 in accordance with procurement guidelines," the LGAS report found.
It concluded that financial management of the entire Poolbeg incinerator project was "weak", the LGAS report said.