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The Australian Department of Defence has confirmed it retains full confidence in consulting contractors such as multinational KPMG, after claims consultants overcharged the taxpayer.
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The renewed confidence follows a 2023 ABC Four Corners report alleging consulting groups, such as KPMG, submitted inflated invoices and billed the federal government for hours that were never worked.
In addition, the program alleged consultants such as KPMG were awarded contracts and contract extensions with little scrutiny by employing former Australian Defence Force staff to influence their colleagues. Four Corners reported that KPMG had won work initially valued at $1.7 billion but eventually billed the Australian taxpayer more than $2.6 billion since 2013.
Senator Barbara Pocock, speaking at a foreign affairs, defence and trade legislation committee meeting on 14 February, questioned whether the issues in relation to contracts and consultants had been fully resolved by the Department of Defence.
“The Department of Defence has 195 active contracts with the big four, to the value of $1.083 billion. You have advised that, of these 195 contracts, the vast majority, more than 55 per cent, are with KPMG, to the value of $636 million. KPMG are by far the biggest contractor to the Department of Defence,” she said.
“We heard in the Four Corners report that KPMG have repeatedly ripped off the Department of Defence by submitting inflated invoices and billing taxpayers for hours never worked. We also heard of alleged misconduct over a $100 million contract awarded to KPMG by the Department of Defence, reportedly beset by serious governance issues and conflicts of interest.
“The Australian community are concerned. They have watched Four Corners. They have issues in their mind about value for money and direct dealing by officers within the big four.
“Consultants have been in the spotlight for the last year, for very good reason. We well and truly have foxes in the henhouse farming contracts for enormous profit and misusing information. How can we trust consultants with access to information that’s critical to our national security if we keep seeing these repeated instances of breaches of trust? Do you maintain confidence in KPMG to handle 108 very large contracts?”
Associate Secretary of the Department of Defence Matt Yannopoulos (PSM), speaking at the meeting, confirmed that Defence has renewed confidence in the contractor.
“Answering the last point of the question, yes, I maintain confidence in the teams that are delivering on those contracts,” he said.
“At least one of the allegations is still the subject of an investigation. I think there was an element of one in the Four Corners program where we had already put information on the public record that said there was no evidence of overcharging, as was alleged.”
Additionally, Yannopoulos said it wasn’t his role to defend the actions of consulting companies.
The Senate meeting also discussed the status of 100 people who had previously worked in Defence and then been hired by KPMG over the past five years. The Senate was notified that the Department of Defence does not track staff once they leave Defence.
“I sought advice from KPMG. They do not track them either,” Yannopoulos said.
The Senate meeting heard that 10 allegations had been received between 1 July 2018 to 1 August 2023 where the actions of individuals stood to benefit one of the big four companies. Of the 10, three had progressed to formal investigations which remain ongoing.
The department outlined that it currently has two security investigations open – a fraud investigation and public interest disclosure investigation – involving employees of the big five, as of 31 December last year. It had also received 15,671 security incident reports, with 107 relating to the big five firms.
