Michael Gove broke the law when the government handed a £560,000 COVID contract to a business he had “personal connections” with, the High Court has ruled.

Justice O’Farrell found that the Cabinet Office’s contract with PR firm Public First was “unlawful” and “gave rise to apparent bias”.

The ruling follows a joint investigation by openDemocracy and The Guardian, which first revealed the company was run by close allies of Gove and the prime minister’s former chief adviser, Dominic Cummings, last July.

One of Public First’s directors, Rachel Wolf, used to be an adviser to Gove and co-wrote the Conservative Party’s election manifesto in 2019. The firm’s other director is James Frayne, whose work alongside Cummings dates back 20 years and who was also hired by Gove when he was education secretary.

Emails revealed in court show that both Gove and Number 10 wanted Public First to be given the work, with the firm subsequently handed contracts without competitive tender.

The judge said: “The existence of personal connections between the Defendant (Gove), Mr Cummings and the directors of Public First was a relevant circumstance that might be perceived to compromise their impartiality and independence in the context of a public procurement.”

Last year, the government defended the contract, saying it was awarded under emergency COVID regulations. But the Cabinet Office’s own public records show that some of the work was, in fact, about Brexit.

Today, the High Court found that the government’s version of events “does not stand up to scrutiny” and “the time constraints...did not exonerate the Defendant from conducting the procurement so as to demonstrate a fair and impartial process of selection”.

The judge added: “Failure to consider any other research agency… would lead a fair minded and informed observer to conclude that there was a real possibility, or a real danger, that the decision maker was biased.”

Public First went on to win more than £1m of public contracts without tender under emergency COVID-19 provisions.

Cummings has described Frayne as a friend, saying he has talked to him “extensively about focus groups and public opinion over many years”.

The pair worked together on a campaign to oppose Britain joining the euro two decades ago and were both key figures opposing a devolved north-east regional assembly, which was rejected in a 2004 referendum.

In a witness statement, Cummings claimed he was the “driving decision-maker” behind the government's decision to hire Public First. But he added: “Obviously I did not request Public First be brought in because they were my friends. I would never do such a thing.”

However, the court ruled it was “incumbent on those involved in the appointment of Public First to ensure that there was a clear record of the objective criteria used to select Public First over other research agencies so that they could allay any suspicion of favourable treatment based on personal or professional friendships.”

Responding to the ruling, Labour’s deputy leader Angela Rayner said: “We all know that the government has acted immorally and unethically, and now a judge has confirmed that yet again the government acted unlawfully in handing out contracts to their mates.

“In the middle of a deadly pandemic not only were those at the heart of government giving out taxpayers’ money to their friends and associates, they have wasted even more trying to cover it up.

“Ministers need to come clean about how they plan to recoup this cash, as well as the billions of pounds dished out to Tory donors and for duff PPE that wasn’t safe.”

Jo Maugham, director of Good Law Project, which brought the legal challenge to court, said: “This is not government for the public good – it is government for the good of friends of the Conservative Party.

“We just don't understand how the prime minister can run a cabinet that acts without proper regard for the law or value for public money. [The] government has claimed there was no favouritism in the awarding of contracts. But the High Court has held [that] an informed observer would conclude otherwise."

The government is reported to have spent up to £600,000 on its failed legal defence – exceeding the value of the original contract for Public First.

The Good Law Project is set to challenge a number of other COVID contracts in court, including deals first exposed by openDemocracy. Earlier this year, it won another High Court battle, which ruled that the government had acted unlawfully by failing to publish the details of some COVID contracts.