Federal Parliament's chief bureaucrat has revealed her own department paid one of her neighbours $30,000 to take photos.

The Department of Parliamentary Services (DPS) commissioned artist Anne Zahalka to produce 10 "photographic works" to celebrate the 25th anniversary of Parliament House.

The Department said she was chosen "because of her international reputation and experience in photographic commissions".

But Ms Zahalka lives just a few doors away from the Sydney home of DPS head Carol Mills and the Federal Opposition is worried about the way the artist was selected.

"Doesn't this raise the obvious question of either a conflict of interest or a perceived conflict of interest", Labor Senator John Faulkner asked Ms Mills during Senate estimates last night.

"It sure as all hell does to me."

Ms Mills told the hearing she was not responsible for picking Ms Zahalka to take the photos.

She said she had met Ms Zahalka a couple of times at street Christmas parties and told colleagues she knew the artist "a little".

Ms Mills: I didn't interfere or involve myself or influence in any way any of that process. Senator Faulkner: Did you advise them in writing of that? Ms Mills: Not in writing, no. At the time I guess I knew her so little that it wasn't something that might be perceived in the way that it's currently being presented. [With] the beauty of hindsight, I probably should have covered that small risk off and I apologise for that.

The large prints were displayed in Canberra and are now part of the Parliament House collection.

According to Ms Mills, the photos are intended to present "a photographic record of the 25th anniversary from the perspective of workers in Parliament House".

Senator Faulkner was clearly unsatisfied with Ms Mills' explanation.

He asked for evidence procurement rules were followed and the conflict of interest was appropriately managed.

"Given the information that has now been made available to this committee I have some questions that I certainly want to pursue in relation to this procurement," Senator Faulkner said.

"I am not satisfied with where we find ourselves in relation to this situation."

Senator Faulkner and Ms Mills have had a frosty relationship at times.

In May, the Labor veteran accused the Department of Parliamentary Services of spying on him using security cameras.