The Commonwealth Auditor General has criticised the Environment Department's procurement process to buy a $1.9 billion new icebreaker to service Australia's Antarctic Territory.
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The total cost over 34 years includes $529 million to design and build a new vessel to replace the ageing Aurora Australis, due to arrive in mid-2020.
The ship will ferry infrastructure, equipment, supplies and personnel to and from the Antarctic.
The audit report finds the procurement process was "largely non-competitive with an outcome that is higher than the cost benchmarks established by the department, and significantly greater than the current chartering costs".
"The department cannot demonstrate that its procurement is providing value with public resources," the report says.
In a reply to the audit office, departmental secretary Gordon de Brouwer disagreed with the finding.
He said the process had been subject to extensive scrutiny and cost modelling by government agencies, external advisors and Cabinet.
"Overall, the department considers that the procurement of the replacement Antarctic vessel has achieved a world-class scientific and logistical capability for the government's Antarctic program at an acceptable level of cost and risk," Mr de Brouwer wrote.
In September 2012 Cabinet approved a non-binding request-for-proposal process, which closed in May 2013.
Seven proposals were received and three shortlisted. One withdrew before a request for tender and only one tender was submitted.
Formal contract negotiations began in October 2015 and the contract was signed in April 2016.
The audit report raises issues with the department's preferred approach to design, build, operate and maintain a new vessel.
"The RFT [request for tender] process prevented industry from submitting any alternatives to the department's preferred DBOM [design, build, operate and maintain] approach," the report notes.
"This resulted in two of the three shortlisted respondents withdrawing without submitting a tender."
The report says that when seeking approval to release the tender request, the department did not advise ministers that only 'design, build, operate and maintain' proposals would be accepted.
The audit also found the tender evaluation report did not compare the costs of a replacement vessel to current charter costs.
"On an annualised basis the contracted price is more than three times the 2015-16 charter cost for the Aurora Australis," the report says.
Mr de Brouwer said there was "always room for improvement" with complex purchases.
"While the audit report does not contain any recommendations, the department acknowledges the range of findings ... and has already taken steps to ensure that lessons have been learned and considered," he said.
