A Home Affairs Department contract with consulting firm Deloitte ballooned more than 900 per cent before it was dumped over a conflict of interest, a damning audit report has shown.
The firm's $1.5 million contract, originally signed for $151,800 in September 2020, lasted for just under eight months and was not awarded in line with federal government rules.
The critical findings are included in a new report released by the Australian National Audit Office on Wednesday into the former Coalition government's now-ditched attempt to create a one-stop shop for visas, licences and permits.
The envisioned system, called the permissions capability, was expected to overhaul and streamline the country's cumbersome visa processing system, focusing on technology that could be used in other government agencies in the future.
It was abandoned in March this year, two years after work on the project first began and $16.5 million had been spent.
The findings come as major consulting firms are put under further scrutiny following the fallout of PricewaterhouseCoopers tax breach scandal.
A Home Affairs official met with a Deloitte employee for a "catch up" meeting regarding the "the urgent need for commercial advisory services for an upcoming tender" on September 3, 2020 but no record of the discussion was retained by the department.
Commercial advisers are engaged to evaluate tender bids to give the government better insights about which bidders best meet the commercial requirements of the work.
Shortly after the meeting, an email was sent to Deloitte by Home Affairs outlining the potential scope of work for commercial advisory services.
Home Affairs later told the audit office in June 2022 it considered this evidence of a "request for quote".
The Deloitte staff member also referred the Home Affairs' official to two Deloitte employees with experience in ICT procurement.
Those two Deloitte employees attended a probity meeting and recorded no conflicts of interest, other than Deloitte being appointed as commercial adviser while also being permitted to bid for the contract.
The risk was deemed "too great" by Home Affairs and Deloitte agreed not to participate in the tender or advise others participating in the procurement.
However, as revealed months later in a complaint by a potential supplier bidding for the contract, a senior Deloitte partner had been seconded to work with another supplier to help them prepare a bid for the work.
The department directed its probity adviser, law firm Maddocks, to look into the matter in March 2021 and a month later it determined the consulting firm had breached rules by failing to declare the conflict of interest.
The contract with Deloitte was suspended on March 30, 2021 and terminated on May 18, 2021 after Maddocks' findings.
The contract with Deloitte had blown out from $151,800 in September 2020 to $1.5 million by the time it was ended, according to the government's tenders site.
Deloitte, who did not provide a response to excerpts of the ANAO report before its publication, has been contacted for comment.
An earlier iteration of the project, the Global Digital Platform, had been dumped in March 2020 with an estimated $80 million having already been spent.
Under the original plans, the winning supplier would have taken a cut of each visa application processed in a system expected to generate hundreds of millions in revenue.
One of the main tenderers, the Australian Visa Processing consortium, was run by former NSW Liberal deputy state director and close associate of former prime minister Scott Morrison, Scott Briggs.
The Canberra Times revealed in 2020 Mr Briggs had donated $133,000 to the Liberal Party in the lead-up to the last election.
Non-disclosure of minister's meeting with would-be supplier an 'administrative oversight'
Elsewhere in the report, it was found former federal minister Stuart Robert met with representatives of ICT firm Accenture before contract negotiations began.
The request for tender was released in October 2020, with eight suppliers, including Accenture, bidding for the work.
Accenture was awarded the deed of standing offer in September 2021.
But the audit office found Mr Robert had met with officials from Accenture in July, 2021 ahead of contract negotiations taking place.
"Contrary to the probity plan and protocols, the Minister for Employment, Workforce, Skills, Small and Family Business [Mr Robert] held a meeting with personnel from the preferred tenderer before the commencement of contract negotiations," the report read.
"This meeting was not recorded in the probity register."
Home Affairs said it disagreed the meeting was "contrary to the probity plan and protocols", adding it was an interview - something that is allowed under procurement rules.
It admitted the meeting's absence in the probity register was an "administrative oversight".
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