A large defence contractor that tried to force a watchdog to censor a critical report is battling claims it acted in contempt of Parliament.
Thales Australia, owned by French military giant Thales, won the contract to build the army's light-armoured patrol vehicle, the Hawkei, for about $2.2 billion.
Auditor-General Grant Hehir investigated the purchase this year to determine whether it was effective and good value for money.
But the government, at Thales' request, intervened to prevent him from publishing some of his findings.
Attorney-General Christian Porter argued he needed to censor parts of the report to protect Australia's "security, defence or international relations".
However, Thales itself revealed, in a related lawsuit, that the business wanted the findings suppressed because they were "highly prejudicial to the commercial interests of Thales", the government and other businesses involved in making the vehicles.
This week, a parliamentary inquiry investigating the censorship published a second letter from Thales, in which the business defended itself from a crossbencher's claim it had breached parliamentary privilege.
Centre Alliance senator Rex Patrick had alleged that Thales, in a bid to block the controversial elements of Mr Hehir's report, had tendered a draft of the report in the Federal Court. Thales denied this, saying its court evidence "identified the factual basis for [its] challenge to the decision to publish the draft report, but did not disclose the content".
It is a breach of parliamentary privilege – and potentially a punishable contempt of Parliament – to tender evidence in a court in an attempt to undermine the work of parliamentary officers such as the Auditor-General.
However, Thales argued that even if it had submitted a draft as evidence in court, draft reports were not protected by privilege.
Mr Hehir expressed his frustration, in his audit report and later in Parliament, at the effects of the decision to suppress his findings. He wrote he was unable to share his conclusion on whether the Hawkeis were "effective and achieved value for money".
However, Thales told the inquiry that some of Mr Hehir's findings were misconceived and flawed.
The business's court application said the disputed parts of the report had compared its vehicles with a United States-commissioned "joint light tactical vehicle".
Thales said the comparison had gauged the two vehicles' capabilities, implying they were similar but that the Hawkei was twice as expensive. It said publishing this information would damage Thales and the government's prospects of exporting the vehicles.
It also argued the comparison was "unfair, does not comply with applicable auditing standards and is of no probative value".
"That is because the comparison involves comparing vehicles which have relevantly different characteristics and qualities, using public-domain material (in relation to the [US vehicle]) which does not disclose the full terms of the transactions, and the comparison fails to take into account benefits to the Commonwealth which it would not obtain on a purchase of the [US vehicle]," Thales' court application read.
"The vehicle cost comparison has little or no value in explaining the performance of the [Hawkei] in achieving its purposes."
The inquiry's deputy chairman, Labor MP Julian Hill, told Parliament last month the decision to gag the Auditor-General set a dangerous precedent.
"But, if that precedent stands, it is exactly replicable to the submarines, to the ships and to tens of billions of dollars of taxpayer money," he said.
The inquiry has discussed changing the law to allow reviews of the Attorney-General's decisions to censor audit reports.