NHS Health Scotland was seeking an agency to help it boost its image at Holyrood. The brief was worth £120,000 over three years.
However, the government agency that organises national health campaigns was beset with criticism in the Scottish national media over the hunt.
Liberal Democrat chief whip Mike Rumbles, who represents West Aberdeenshire and Kincardine, said: 'At a time when the NHS has to dig deep to find £200m of efficiency savings, blowing this kind of money on a PR firm to lobby the parliament is ludicrous.'
Labour MSP Richard Baker called for Audit Scotland to 'investigate whether this contract gives the taxpayer value for money'.
NHS Health Scotland head of corporate communications Chrissie Fairclough told PRWeek: 'We've taken a decision to bring our whole corporate comms activities in-house, owing to the current political climate.'
Fairclough added that the negative coverage was 'a factor' in the decision.
The quango had advertised for an agency to represent it in 'the Scottish parliamentary arena'. It planned to use the agency to promote 12 campaigns during 2010-11 on a variety of subjects including child oral health, cervical screening and meningitis awareness. This activity will now be handled in-house.
HOW I SEE IT - Matt Bryant, Director, Connect Public Affairs
This is just one instance and it doesn't start a trend. Having said that, the use of public affairs and public relations agencies in most cases offers far better value for money than doing it in-house. Once a body takes a decision to use additional support, then an agency approach is the best way forward.
The use of public money has always been under scrutiny. Everyone in the public sector has to be held accountable for where it spends, but there is a wider obligation to spend effectively.
NHS Health Scotland may have repressed its needs by backing down, but it's not the first time I've heard of an organisation backing out of a pitch.