The company, which holds a $423m contract for services on Manus Island, has blamed breaches on an ‘inability to deploy expat personnel’

This article is more than 1 year old

This article is more than 1 year old

The offshore detention security contractor Paladin has had to pay back $5.7m to the Australian government for thousands of breaches of its key performance indicators.

Documents produced to the Senate on Monday reveal that from May 2018 to April 2019 the contractor was forced to credit back $3.1m of its $423m contract value and faced an adverse assessment for a further $8.1m for the month of July 2018.

Asked about the final outcome for that month, the home affairs department referred Guardian Australia to a document showing Paladin was charged just $2.6m because the contract caps fines at 15% of monthly fees.

In that month the department assessed that Paladin would have owed $5.6m for 928 failures relating to timely delivery of transport services, $1.4m for 592 breaches of entry and egress processes and $973,500 relating to 649 breaches of training and qualifications requirements.

Paladin agreed to pay back $753,900 in May 2018, $701,100 in June and $921,900 in August 2018.

Paladin's contract for Manus Island extended but only for a 'limited' time Read more

In the documents Paladin explained the failures by describing its “inability to deploy expat personnel”, but the department found this was no excuse for failure to deliver training to staff and “should not prevent … incident reporting, particularly as incident reporting is generally overseen in Australia”.

Paladin’s contract compliance has generally improved as the numbers of refugees and asylum seekers on Manus have decreased, with fines shrinking to $54,000 in March 2019 and $9,600 in April, coming off a spike in fines in February when it agreed to pay back $229,800.

In that month Paladin recorded 20 breaches of perimeter security, 25 breaches of entry and egress processes, and 16 breaches of planned maintenance. It also recorded 295 breaches relating to transport, for which it was not fined.

Paladin Holdings Pte Ltd was originally engaged to provide security at Manus Island in Papua New Guinea in September 2017, despite limited experience in the provision of garrison support and welfare services.

The Department of Home Affairs secretary, Michael Pezzullo, has explained Paladin was selected at short notice because the PNG government revoked its offer to provide the services and major companies were not interested in tendering.

After contract extensions, Paladin was paid a total of $423m, prompting scrutiny from the former PNG prime minister Peter O’Neill and the Labor opposition in Australia.

Despite PNG’s new prime minister, James Marape, calling for the contract to be cancelled in June it was temporarily extended to 30 November.

When questioned about Paladin’s performance earlier in September, the employment minister, Michaelia Cash – representing the home affairs minister, Peter Dutton – said the department engages in “active management of the performance management framework” with Paladin.

“The identification and rectification of service failures demonstrate sound contract and fiscal management and ensure services are maintained at required levels,” Cash told the Senate.

Labor’s home affairs spokeswoman, Kristina Keneally, noted that Paladin had recorded more than 1,000 performance failures in an 18-month period, almost two a day, including “such poor maintenance that a Home Affairs official actually fell through rotting floorboards during a prearranged inspection”.

Cash explained that “higher levels of abatements during the initial period of contracts are not unexpected, and Paladin demonstrated continuous improvement in meeting service standards during the course of the contract through transition and normal operations”.

“The abatements, I’m instructed, often related to relatively minor administrative failures.”

• This story was amended on 18 September 2019 to reflect updated figures from the home affairs department.