In question time on Thursday, Mr Dutton further distanced himself from awarding the controversial contracts.
“If there are issues, my department, the secretary, will deal with those issues,” he said.
The department and Mr Dutton are under pressure to explain how Paladin, a thinly capitalised group of companies, with no experience delivering government services, emerged with two contracts worth a combined value of $423 million.
In a series of reports over recent days The Australian Financial Review has revealed Paladin was awarded the contracts after closed tenders and that one of its principles, Craig Thrupp, had left a string of failed contracts and bad debts across Asia.
Home Affairs also extended Paladin’s contract on January 3 and gave it an additional $109 million, despite allegations of deception, lying during the tender process and questionable payments. These have been aired in court documents related to a legal dispute between Paladin and a former executive.
Home Affairs refused to comment on its attempts to exclude Paladin from FOI laws or provide a reason why it was not subject to Commonwealth procurement rules.
“The department has nothing further to add,” it said in a statement.
The final contract shows while Paladin was not forced to follow Commonwealth procurement rules, it must comply with the “Australian Government Information Security Manual”, fraud controls and the “Protective Security Policy Framework”.
The procurement rules are designed to promote transparency, accountability and value for taxpayers’ money. While some exemptions can apply for private contractors or those operating overseas, three people familiar with such arrangements said they would typically apply to any contractor spending government money.
One of the people said it was clearly a point of contention in the Paladin contract given it was put into an early draft, but then struck out.
Centre Alliance senator Stirling Griff said “one would expect the principles enshrined in the government procurement rules would apply to a contract of that value”.
“This contract is clearly lacking in so many ways,” he said.
Senator Griff said it was “staggering that [Mr] Dutton had no oversight of a contract of that size”.
“You would think a contract worth hundreds of millions of dollars would have some kind of oversight of the minister. I think the public would be horrified that someone further down the chain could sign off on this,” he said.
The issue is set to be the focus of intense scrutiny at Senate Estimates next week with Mr Griff, the Greens and Labor all looking to raise the matter.
Earlier in the week independent MP Kerryn Phelps said the contract should be investigated by the new National Integrity Commission.
“I think it is extraordinary that this amount of money is being spent with virtually no accountability or transparency,” she said.
The Financial Review estimated the Paladin web of companies could be earning as much as $17 million a month, after costs, from providing security, some maintenance, IT service and local transport on Manus Island.
The total value of Paladin’s contracts exceeds that paid to top-tier consulting firms, such as Ernst & Young, while the daily cost per detainee of the service is more than double the rate for a suite in a five-star hotel with views of Sydney Harbour.
The Manus contracts released by Mr Dutton are heavily redacted and he denied requests for further information on the grounds it would harm relations with Papua New Guinea.
It also came about after previous contractor Transfield bowed to public pressure and opted out of the lucrative but controversial work. Transfield, which changed its name to Broadspectrum, had managed the offshore processing centre at Lombrum until October 2017 when refugees and asylum seekers were moved to the three camps at Lorengau. The previous year, the PNG supreme court had declared the offshore processing centre illegal and Broadspectrum’s new owner, Spanish firm Ferrovial, made it clear it would not manage these type of facilities in the future.
That opened up an opportunity for lesser-known players like Paladin and more local involvement.
In September 2017, Paladin Solutions PNG, wholly owned by Paladin Holdings in Singapore, won a $72.7 million contract with Home Affairs, later extended to a total value of $89 million, for providing garrison services at East Lorengau Transit Centre through to February 2018. The Singapore parent would later go on to win a second contract, eventually valued at $333.5 million, to provide garrison services at East Lorengau and the other sites from February 2018 to June this year.