The Defence department doesn't want to fork out for compensation to aggrieved contractors using its own money, saying the government should share the burden.

Defence fears that plans to make it easier for businesses to complain about departments breaking Commonwealth procurement rules could sap money from its budget, which it says should be spent on the department's projects.

The Defence Department recorded the largest spend on procurement contracts in the government. Credit:Kate Geraghty

It reported by far the largest yearly spend on contracts in 2015-16, dialling up a bill of $30.5 billion or 54 per cent of the total value of the government contractor spending, far ahead of the second-placed National Blood Authority on $9.3 billion.

Defence told a Senate inquiry into the legislation that paying claims for covered procurement cases on its own could harm the department's "capability", and suggested whole-of-government funding for payment instead.