A council is under an obligation to obtain good commercial terms and to exclude personal considerations from decisions.
What counts as good commercial terms can be subjective, since it is not only price that affects value for money. Whether quotes should be sought depends on the financial standing orders of the council, if there are any. For an amount of £7,000 quotations would normally be sought. However, this is not always practical, and does depend on their being a number of suitable providers available.
Having been a client of the architect is not necessarily a bad thing - having had personal experience of the standard of work provided could be an advantage.
You can certainly question the council about the matter. If you feel that you have exhausted the possibilities of questioning the council, then you could raise the matter with the auditors.