By Angus Grigg & Lisa Murray - Financial Review
A source in the Prime Minister's office in PNG has told The Australian Financial Review the new government of James Marape wants the Paladin contract to finish on June 30 and for an open tender process to be run allowing greater involvement for local firms.
"PNG companies now have the capacity and expertise to do the job and should be given the opportunity to participate," said the person.
With the contract finishing in just two weeks there appears insufficient time to run an open-tender process, which can take as long as 12 months, and so the most-likely outcome is for Paladin's contract to be extended in the short term.
This would then allow the government to invite other parties to tender and meet the new requirements for local participation coming out of Port Moresby.
When asked about Paladin on Sunday, Mr Dutton told the ABC "the likely arrangement is that there will be a continuation".
The Paladin contract is being investigated by both the Commonwealth Auditor-General and by internal auditors within Home Affairs.
Mr Dutton's comments come after the department recently extended a similar services contract for running the detention centre on Nauru.
In that case, Brisbane firm Canstruct International was paid an extra $120 million to extend the contract until July 31, taking its total value to $711 million.
This move suggests the department may also opt for a short-term extension to the Paladin contract, buying the government more time to address the many concerns raised.
Paladin's contract became an issue for the government after the Financial Review revealed in February the little known security firm was given a contract worth $20.9 million a month without a competitive tender.
The Financial Review also revealed Paladin had limited experience with large contracts and one of its local directors, Kisokau Powaseu, was arrested in January on charges of fraud and money laundering.
Paladin was given a $109 million extension in January. It later emerged, four months prior to the extension, Paladin's managing director Craig Thrupp had been removed from his duties in relation to the contract after the firm failed to comply with a direction from the Home Affairs department.
The government faced further scrutiny in Senate Estimates given it is paying over $1600 a day to house each refugee on Manus, not including food and welfare services, more than double the price of a suite at the Shangri-La hotel in Sydney.
Paladin is estimated to be making a monthly profit of about $17 million from the contract.
Mr Dutton has previously sought to distance himself from contract and did so again on Sunday saying it was "an issue for the department".
"They've obviously got people on the panel, they've obviously got contracting arrangements and they'll look at the history of those people who are applying, they'll look at the suitability for them to provide services, and they will make judgements based on that," he said.
"I don't want to spend money on Manus and Nauru, I don't want people there. I want them off as quickly as possible."
Mr Dutton said his department would work with PNG authorities about ongoing security arrangements. "We've got to make sure that we're getting value for money," he said.
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