The route due to be reopened in 2014 after a gap of 45 years, will be built using a novel “non-profit distributing” approach untried on the railways, with the line run separately from the rest of the British network.

The contract accounts for up to £230m of the £300m scheme.

The competition has attracted US and Spanish companies into the fray with UK contracting partners.

The three successful consortia moving into competitive dialogue are:

BAM – BAM UK

IMCD – Sir Robert McAlpine, Carillion and Spanish firm Iridium Concesiones de Infrastructuras SA

New Borders Railway – Fluor , Miller Construction, Uberior Infrastructure Investments

John Swinney, cabinet secretary for finance, said: “I am encouraged by the strong UK and European interest received from the construction and financial industry and look forward to a competitive dialogue process which will introduce real competition to the rail market, encourage innovation and drive best value for money.

“This milestone takes us another step closer to providing timetabled passenger train services to communities along the route for the first time in over 40 years.

Last January more than 55 UK and European companies attended a Transport Scotland briefing on the job.

Five consortia, comprising a total of 12 construction and financial companies, submitted pre-qualification questionnaires in March 2010.

Now the remaining three preferred consortia will take part in Competitive Dialogue before being reduced to the two that will submit a final tender.

The contract for Borders Railway will be made in winter 2011 with main construction work also beginning at this time.

The project is estimated for completion with train services running in 2014.

All the necessary land has been acquired to allow construction of the railway.

Accelerated funding was made available last year to allow advanced works to be completed early to reduce the level of risk in the main works contract.

The utilities work, which began in March 2010, ‘triggered’ the Waverley Railway (Scotland) Act 2006 which states that once work has begun the railway must be finished in its entirety from Edinburgh to Tweedbank.