create a class library project with Service Reference?

Hello everyone! i am facing a big issue and i need some help to understand what's the best approach, and what should i do in this situation.

I will explain with some detail what i need to do:

 

I am in charge to develop in C# a DLL that will be installed by the Dynamics NAV team, and this DLL will be used for them to call webservices .

My webservice will act like the middlelayer in this communication. I will have to communicate with this other company who is hosting this webservices i believe by "adding service reference" . Dynamics NAV will send me a XML and i will have to read the nodes with the request and i will have to receive the request, handle the response by this other company and send the response back to my NAV team. The thing is....they want just a DLL to be installed in their machine so they will to a normal call to my webservices.

 

I will have to create a Class Library right? but i can't add any Service Reference in this type of project.

 

WHat should i do, help me to sort this out please. Im facing this architectural problem right now

 

Much apprecciate