Somerset County Council is to end a contract with the joint venture company Southwest One, the BBC has learned.
A 10-year-long deal was due to end in November 2017 but the council's cabinet is expected to decide later to terminate it a year early.
In 2013 the council paid £5.9m to settle a contract dispute with the outsourcing partnership.
Southwest One, which is 75% owned by IBM, carries out administrative and back office tasks for the council.
The partnership was set up between the county council, Taunton Deane Borough Council and Avon and Somerset Police in 2007.
At the time the then Liberal Democrat-led authority said it would save it about £180m over 10 years.
But in 2012 the private company launched legal action against the council, in a dispute over allegations the firm was failing to deliver promised savings.
Southwest One tried to sue the authority for £25m, but the matter was settled out of court the following year.
The now Conservative-led county council's decision does not affect the borough council's and the police's contracts with Southwest One, the BBC understands.
There has so far been no formal comment on the decision from either the county council or Southwest One.