Edward Leigh, MP, chairman of the PAC, said, "By pursuing its back-room deal with Dr Foster LLP, the Department of Health failed in its duty to be open to parliament and the taxpayer.
"There was no fair and competitive tendering competition, as laid down in public sector procurement guidelines. And Treasury guidance on joint ventures between public and private sectors was ignored.
Instead, the deal was handed to Dr Foster on a plate," said Leigh.
Leigh said that without "the competitive pressure inherent in a tender process" the Department's Information Centre could not demonstrate that it had paid the best price for its 50% share of the joint venture.
"Certainly, the £12m it paid, £7.6m of which went straight into the pockets of Dr Foster's shareholders, was between a half and a third higher than the Department's financial advisers' evaluation," said Leigh.
The Department sought to form the joint venture to improve data dissemination capabilities across the NHS.
Comment on this article: firstname.lastname@example.org