ON the face of it, it was a good deal for the taxpayer. Anglian Water Business (AWB), the privatised utility which has been awarded the contract to supply all of Scotland's public bodies, will do it for £5million per year less than its nearest competitor. A further £5million per year could be saved depending on the success of its proposed water efficiency measures, designed to reduce consumption. That's a saving of up to £40million over the four years of the contract - a tidy sum at a time of squeezed public sector budgets.

Yet there was widespread dismay when Keith Brown, the Infrastructure Secretary, announced that AWB had clinched the £350million deal and Business Stream, a subsidiary of publicly-owned Scottish Water, would, from December, cease to supply the country's schools, hospitals, local authorities, colleges, universities and quangos.

Trade unions and Holyrood's opposition parties (well, those which were not the Scottish Conservatives) voiced disappointment, which turned to anger when it emerged that of the six companies bidding for the contract, Business Stream had been rated best for quality of service.

Even the minister himself sounded less than triumphant. "This is the best deal for Scotland under the rules that bind us," he said.

He had no choice but to put the water contract out to tender, said, because of legislation "introduced by a previous administration".

If you were still in any doubt about the government's discomfort over the issue, you only had to consider the timing. The announcement was due to be made in February but the tendering process was extended to allow the six bidders to "consider initial feedback". The delay,

which did not affect the outcome, pushed a final decision back until after the election.

It's no surprise Mr Brown looked a little sheepish. He still bears a few scars from handing the £2.5billion ScotRail franchise to Abellio, an offshoot of the Dutch national railway operator, ending Aberdeen-based FirstGroup's 10 year run as the country's rail service provider.

The circumstances then were slightly different; ministers faced calls to defer the rail franchise until the new Scotland Bill gave them the power to let a non-profit public sector train operator compete.

But the criticism amounted to the same thing. As Jackie Baillie, Labour's public services spokeswoman, put it: "The SNP Government in Edinburgh has consistently failed to use the procurement powers at it's disposal to build a fairer economy."

Mr Brown was right to say his hands were tied by the 2005 Water Services Act

The legislation (which, he somehow forgot to mention, was supported by the SNP) was designed to protect Scottish Water's status as a public utility. The water industry was opened up to competition under the 1998 Competition Act, which harmonised UK and EU law. The last Labour-Lib Dem government at Holyrood satisfied the requirements of the Act by allowing the privatisation of non-domestic supplies only.

The contract to supply public bodies was split into two lots, local authorities and the rest, and judged on a 50/50 balance of price and service quality.

AWB offered the best value in both bids, the government said.

Ms Baillie accused the Scottish Government of "bungling" the contract. She argued it should have been split up regionally, giving Business Stream a greater chance to hold on to some of the business.

The idea was dismissed by the Scottish Government, which pointed out that Business Stream competed successfully under the same rules last time round. It had not been put at a disadvantage by the system, in other words.

But there are hopes that major public contracts will be improved in future.

Public sector union Unison, together with a long list of third sector bodies, campaigned successfully for anti-tax avoidance measures to be included in the Scottish Government's recent Public Procurement Bill.

Regulations are currently being drawn up which will guide ministers on how it should be taken into account when assessing bidders.

We'll see the details later this year but such rules might have made a difference in the water contract. AWB has been criticised in the past for limiting the tax it pays by routing profits through tax havens.

In the meantime, ministers will continue to face difficult decisions judging what represents best value for taxpayers' cash. And Business Stream will go looking for business in England when non-domestic water supplies are opened up to competition in 2017.