The dial-a-ride service operators were grant funded before the local authority decided to introduce a competitive tender process for community transport.
This was adopted by Central Bedfordshire Council's executive as part of a passenger transport strategy.
But councillors expressed their concerns when the subject was debated at committees.
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Conservative Cranfield and Marston Moretaine Ken Matthews told one meeting: "I believe we owe it to our residents to ensure that we are open and transparent.
"Unfortunately, and it pains me to say it, I believe in this instance we have failed."
One of the former operators Link-A-Ride Community Transport is now in danger of ceasing to trade, the council meeting heard.
The service has been provided for more than 30 years to local people unable to use public transport because of age or disability, according to the company's manager Cheryl Coverdale.
"But we're more than that, playing a key role in supporting vulnerable residents and reducing social isolation and loneliness," she explained.
"For many our service is a lifeline which enables them to take part in the community and without us they would rarely leave home.
"Link-A-Ride no longer has funding from CBC. We've been making representations asking you to address your actions, but these have been dismissed.
"Since your funding was withdrawn, we have worked hard to reduce costs and increase alternative sources of income without cutting services.
"But sadly we're coming to the end of the road," she added. "We're unable to secure funding for the next year.
"We will have to close, and your community will lose seven local jobs."
Jane Dunn, whose brothers are Link-A-Ride members, said the service has made a huge difference to her twin brothers since they moved to Ampthill.
"They are vulnerable adults in their 60s and have learning difficulties," she explained.
"Link-A-Ride has opened up a whole new bunch of opportunities for them, giving them a choice and control over some of their daily activities."
A Wixams retirement village representative asked: "How can the council put a price on people's quality of life and wellbeing?
"Cheryl and her group of drivers have given back so much in the short time we have been using Link-A-Ride service."
Conservative Arlesey councillor Ian Dalgarno replied: "I do fully appreciate the financial position Mid-Beds Link-A-Ride find themselves in.
"The award of contracts for community transport provision across Central Bedfordshire has been considered by the corporate resources committee, the sustainable communities overview and scrutiny committee, and a task and finish group.
"The process which was followed was correct and fully compliant.
"It is a discretionary service, which not every local authority provides and has stopped in many areas.
"In Central Bedfordshire, we value the service and have awarded contracts. We want to ensure the vulnerable members of our community are looked after.
"We spend more than £250,000 a year on providing these contracts and services," said councillor Dalgarno, who's the executive member for community services.
"We have contracted Greensands Community Transport who have the capacity to provide the level of service of Mid Beds Link-A-Ride.
"Should Link-A-Ride cease to exist, and we sincerely hope it doesn't, Greensands has the capacity to pick up the slack and the gap that's there."