Somerset County Council has issued a statement after it emerged the authority is being taken to court by Southwest One.
The public-private partnership was announced in 2007 with the aim of saving the authority millions of pounds.
The dispute has arisen because the council and Southwest One disagrees on the amount of savings made so far – and therefore how much Southwest One is owed.
The council’s statement reads: “We are in disagreement with Southwest One about the quality of the procurement service and what payments Southwest One is entitled to as a result of savings made by getting better deals through the joint venture.
“As set out in the terms of the contract, we had hoped we would be able to settle this issue through mediation and negotiation. It is now apparent that this will not be possible and it is disappointing that we are in the position of going to court.
“It is paramount that we look after the best interests of tax payers and take action when standards of performance and quality are not being met.
“We will therefore robustly defend our position and make counter-claims where we believe we have suffered losses.
“Somerset County Council will not be commenting any further on this issue at this stage.”