Hartlepool Borough Council has launched a comms service for companies and organisations to generate income.
It is now representing Wynyard Business Park, schools within Harlepool and Cleveland Fire Brigade.
However, Recognition PR founder and senior partner Graham Robb said the council's move was 'quite wrong'.
He added: 'It is galling to have a competitor that has not had to fund its own investments taking private sector work.'
Hartlepool Council cabinet member for performance Jonathan Brash hit back: 'If private sector firms, like Recognition PR, are able to bid for public sector contracts then local authorities should be able to bid for private sector work.'