A couple of years ago, I bought 40 embroidered polo shirts for my band at a cost of around £7 each.
Sadly, when suppliers tender to local authorities, cost isn't always the deciding factor. The authorities will want to be assured that goods can be produced in sufficient quantity and reasonable time.
Departments and schools in our authority have to buy through a central purchasing organisation, to whom companies tender for supply. That organisation isn't directly funded by taxpayers, so they're not answerable to them in the same way. The authority relies on the purchasing organisation to make the best deals on their behalf. When when we buy goods and services for the department, we have to go to companies that are approved by this organisation. They aren't always the cheapest and they're not necessarily the best, either. But we're bound by the authority's contract to do so. Sadly, mollykins, it's not illegal, although I suspect a few palms are greased in the whole process.