A serious blunder in the Australian Taxation office's tender process has derailed a vital $9 million national printing and distribution contract.

A serious blunder in the Australian Taxation office's tender process has derailed a vital $9 million national printing and distribution contract. Photo: Andrew Quilty

An embarrassing blunder in the Australian Taxation Office's tender process derailed a vital $9 million national printing and distribution contract, internal ATO documents reveal.

The ATO bungled the tender for its key annual Tax Time printing contract by posting commercial-in-confidence data of one of its contractors on a government website, forcing the ATO to start the process from scratch.

The Sydney-based company that was the victim of the lapse told the ATO that it had committed a serious breach of government procurement rules and had compromised the entire tender process.

The paper trail, seen by Fairfax, also reveals the damage control exercise undertaken by the agency late last year with lawyers, probity advisers and independent financial adviser brought in to advise the Tax Office on how to manage the fallout from the blunder.

The three-year contract to print and distribute the Tax Time material is valued at $9 million.

Officials from the ATO's publishing branch posted the tender documents on the official federal government procurement website on October 18, 2012. Two potential contractors, Independent Print Media Group (IPMG) and Victorian-based PMP, vied for the work.

Tax Time is sent out nationally each year to remind taxpayers of their obligations at the end of the financial year. But the bureaucrats posted "commercial in confidence" details of how IPMG had carried out the contract, which the Fyshwick firm had held between 2009 and 2012, including prices charged and where the work was done.

When the mistake was pointed out by IPMG's Canberra manager, Brad Jones, the next morning, the material was removed from the website and assurances were sought from PMP that the Victorian firm had not accessed the confidential information on its rival.

But IPMG said that enormous damage had already been done.

The company, in its complaints to the ATO, accused it of a damaging leak of confidential "intellectual property" that could have had commercial consequences for IPMG, beyond its pitch for the Tax Time work.

"The information released by the ATO is a breach of government rules and guidelines and the integrity of the process has still been compromised even if the ATO do reissue the new RFQ (request for tender)," Mr Jones wrote.

The printing executive, whose company eventually won the Tax Time contract in the subsequent tender, did not respond to requests for an interview on Thursday.

After taking legal advice, the Tax Office advised Mr Jones that a "sincerest apology" and a restart of the request for the tender process was all the recourse the ATO needed to offer IPMG.

An ATO spokeswoman said on Thursday that the posting of IPMG's data was the result of ''human error. We take the security of commercial-in-confidence information entrusted to us very seriously,'' she said.

''We immediately conducted an investigation and it is complete. The RFQ process was cancelled and a new process was re-issued on advice from the Australian Government Solicitor.''