The Audit Commission has criticised "lack of attention to good governance" in a hospital trust that procured IT services from a company directed by the chief executive’s husband.

Although the report found no evidence that Christine Miles, chief executive of the Royal Orthopaedic Hospital NHS Trust, did anything wrong, it stressed that she should have distanced herself completely from each procurement.

The IT services company in question, Talquin, won five contracts worth almost £72,500 from the Birmingham-based NHS trust in areas including project support, data protection awareness and oncology database management.

The first contract, in November 2002, was for IM&T management illness cover and support, ahead of a visit from the Commission for Health Improvement. "Whilst we understand the urgency and importance of the CHI visit [the CEO] should not have been involved in selecting Talquin," says the Audit Commission report.

"Her continuing involvement by being present at some of the subsequent interviews of potential suppliers was inappropriate. This was a serious error of judgement by the CEO and the Chairman."

In another contract award, for data protection awareness, supporting paperwork was not found by the Audit Commission. For project management of the oncology database project management, only one quote – from Talquin – was obtained.

Although the Commission acknowledged that the prices charged and the work carried out by Talquin were of a professional standard, the trust was unable to demonstrate it had achieved value for money, said the report.

The Commission added: "The standard of procurement documentation for IM&T was generally poor… there were weaknesses in the operation of purchasing procedures for IM&T purchases."

There was "no evidence that the CEO exercised any undue influence on staff to use Talquin Limited… however, given her influence within the Trust we consider that it was unwise to allow Talquin to be used repeatedly. The Board should at the very least have confirmed that the Standards of Business Conduct and Standing Orders were being fully complied with."

The report’s recommendations for the trust’s board include that they should ensure staff with any interest in potential suppliers should have no part in the selection process, and that they should make sure they keep all relevant procurement documentation. It noted that it had already taken some action to solve these problems.

Chair of the Royal Orthopaedic Hospital NHS Trust, Les Lawrence, said of the report: "With the benefit of hindsight, we could have done some things better and we have used this review as a learning process and have already tightened up some of our processes and procedures to make them more robust.

"The report finds nothing dishonest and reflects decisive actions taken by strong management to benefit staff and patients. The report has praise in places but there are some criticisms which we have and shall act upon."