Healthcare commissioners did not breach regulations when deciding who should receive a £100million contract to run community services in East Devon, an investigation by a watchdog has found.

An inquiry by Monitor concluded that the Northern, Eastern and Western Devon Clinical Commissioning Group (CCG) acted appropriately when selecting a new provider to run services in hospitals, including Sidmouth’s and Ottery St Mary’s.

But Monitor says the CCG now needs to do more work to ensure it will get value for money before formally awarding the contract.

In November, the CCG named the Royal Devon and Exeter NHS Foundation Trust as its ‘preferred provider’ for the multi-million pound contract for community services.

The investigation was launched in January after current provider, the Northern Devon Healthcare NHS Trust, complained to Monitor.

The Northern Devon Trust claimed that the CCG had undertaken an ‘inadequate and unfair process’ in awarding the contract.

But in a report published last week, the health watchdog found that the CCG had acted properly and had not breached commissioning rules.

Dr Tim Burke, a GP in North Devon and chairman of the CCG, hailed the conclusions as ‘great news for patients’.

He said: “We have always maintained that we were taking decisions in the best interests of patients, so we are very pleased that Monitor has found in our favour.

“All NHS organisations involved will now work together on the next steps.”

Roger French, Northern Devon Healthcare NHS Trust chairman, said: “We accept the findings of the Monitor report entirely.

“Our main objective was to ensure that value for money was taken thoroughly into account before any decision to procure the Eastern community services.”

Catherine Davies, executive director of co-operation and competition at Monitor, said: “Patients are likely to be better off as a result of our investigation because the CCG will do further work before awarding the contract, especially around ensuring value for money.”