Torridge DC awarded the five-year grounds maintenance contract to its DSO in November 1995, but attracted the attention of the old Department of the Environment in January 1996 because the£70,000 DSO bid was£25,000 higher than the lowest private sector bid, from Wyvale Landscapes.
In a move which shows the government's determination to adhere to existing CCT rules, Ms Armstrong has now told Torridge to put the contract back out to competition. The in-house team will not be excluded from tendering, but will need the minister's approval before starting on any new contract.
Torridge chief executive Richard Brasington defended awarding the contract in-house and claimed Ms Armstrong's decision would cause further confusion among local authorities awarding contracts in the interim period before the introduction of best value.
Mr Brasington said the council responded to the DoE's original concerns promptly, but did not hear anything in response for 18 months. He said Ms Armstrong's officials contacted the authority three months ago.
Mr Brasington added: 'We're expected to be efficient, surely a decision like this should have been taken in February 1996, not October 1997. If we take the year we are allowed to complete re-tendering, the current contract will have been in place for three years.'
A Department of the Environment, Transport and the Regions spokesman said: 'The minister has already announced there will be no moratorium from CCT in England. The minister wants an orderly transition from CCT to best value, but there can be no vacuum between the two regimes.'
Wyvale Landscapes failed to respond to a request for comment.