The Immigration Department has made mistakes in its handling of contracts for offshore detention centres, Immigration Minister Peter Dutton has conceded.

Key points: Department had to act quickly to stop deaths at sea, Mr Dutton says

Department had to act quickly to stop deaths at sea, Mr Dutton says Department had "serious deficiencies" in how it sought contracts with companies: report

Department had "serious deficiencies" in how it sought contracts with companies: report Cost of detention was more than double the estimated figure: report

A report from the Australian National Audit Office (ANAO) released last week detailed concerns over the contracting of welfare, security, catering and cleaning services, adding that the department accepted a Broadspectrum (formerly known as Transfield) contract which had blown out by more than $1 billion without seeking alternative quotes.

Mr Dutton said the department had to act quickly to set up the detention centres under the former Labor government.

"(PM Julia) Gillard at the time made an announcement that people would go to Nauru and things had to be set up within a couple of weeks," he said.

"So let's put it in context … yes I'm sure mistakes were made and decisions were rushed."

Mr Dutton said the department had to act quickly to stop deaths at sea.

"When I speak to the Border Force staff and the sailors at sea, they were pulling a 1,000 people a week off boats, they were pulling bodies out of the water of children that'd been eaten by sharks and the rest," he said.

The ANAO report stated the department was unable to demonstrate it had secured value for money in three of the four hiring processes for centres on Nauru and Manus Island.

It found the department had "serious and persistent deficiencies" in the way it sought contracts with companies to set up the detention centres from 2012 to 2016.

For example, the department did not require Transfield to provide a proposal specifying services to be delivered and a price when establishing the centres in 2012.

"As a result, it was very difficult for the department to demonstrate that it had conducted a robust value-for-money assessment which considered the financial and non-financial benefits of the proposal," the report stated.

Mr Dutton defended the department's record.

"In relation to my experience with the department, they are professional operators, they have an absolute determination to preside over a program which is well run," he said.

Cost of detention double the estimated figure

The report went on to say prices were not settled until contracts with service providers were entered into.

When consolidating contracts for Nauru and Manus Island in 2013 and 2014, the bid for Manus Island exceeded historical costs by between $200 million and $300 million.

The report went on to state that due to falling numbers of asylum seekers being detained, the cost of said detention was more than double the estimated figure.

"The Prime Minister had requested that per-head costs be lower as a result of retendering the contracts, but the department did not calculate a per-person cost," it stated.

"Finance advised the ANAO that under the consolidated contract, the per-person-per-annum cost of holding a person in the offshore processing centres in Nauru and on Manus Island, was estimated at $573,111, at the time of the Mid-Year Economic and Fiscal Outlook 2015-16.

"Prior to consolidation, Finance estimated the cost at $201,000."