Department of Parliamentary Services boss Carol Mills told an estimates committee on Monday that there "was likely to be inappropriate practice" on a contract held by Canberra company W Catering until 2012.

Ms Mills was grilled by NSW Liberal senator Bill Heffernan over the $550,000-a-year catering contract for Parliament House.

But Ms Mills said there was not enough information to prompt her department to call police.

W Catering was part of a network of companies controlled by high-profile Canberra hospitality operator Fiona Wright that collapsed in 2012 with debts of more than $4 million.

"Were they the people who were cooking here and taking the tucker out to other events?" Senator Heffernan asked. "The allegation was that this place was being used to provide services to other buildings in the region."

Ms Mills told the Senator that the allegation had been investigated. "On the available evidence, it appears to be true," she said.

Senator Heffernan wanted to know why police were not called to investigate what he described as "fraud". ''Did anyone call the police," he asked.

Ms Mills said an external investigation into W Catering's activities had been conducted.

"I had an external organisation look at all the material that I could find in terms of the accounts, the proceedings, etc. They concluded there was likely to be inappropriate practice," she said.

“There was insufficient information to take it further.”

Intercontinental Hotels group, now hold a renegotiated contract for Parliament House catering.

Ms Wright could not be contacted for comment on Monday.