A failed online project meant to connect students, teachers and parents at Victorian Government schools was corrupt, and cost the taxpayer between $127 and $240 million, the state's watchdog has found.

Key points: IBAC finds evidence of corruption and conflict of interest in senior levels of Education Department

IBAC finds evidence of corruption and conflict of interest in senior levels of Education Department Ultranet online portal meant to connect parents, teachers and students was scrapped in 2013

Ultranet online portal meant to connect parents, teachers and students was scrapped in 2013 Senior officers within Education Department had shares in company providing the technology, report says

The Independent Broad-based Anti-corruption Commission (IBAC) said its investigation into the online portal Ultranet found senior education department staff were involved in corruption, mismanagement, improper spending and conflicts of interest.

The inquiry heard the project was a shambles, and after a cost blowout it was scrapped in 2013.

In a report tabled in Parliament today, IBAC said the tender process for a company to create the technology for the portal was improperly influenced by Darrell Fraser, the principal at Glen Waverley Secondary College.

"This investigation found that, from a position of power as a senior executive responsible for the allocation of significant funds, Mr Fraser was instrumental in manipulating procurement processes to ensure the Ultranet contract was awarded to the CSG/Oracle consortium," it said.

"Companies with whom he had a long-standing relationship."

Operation Dunham found Mr Fraser also attempted to influence the outcome of the tender process by "stacking" an assessment team with like-minded colleagues.

'Disturbing pattern of improper behaviour'

IBAC Commissioner Stephen O'Bryan QC said the actions of those involved was disturbing.

"Taken singly, many of the actions and behaviours by these public servants would be of concern. Taken together, they show a disturbing pattern of improper behaviour," he said.

IBAC has made a recommendation that the secretary of the Department of Education and Training provide a detailed reported of its efforts to reform its rules around transparency, accountability and risk minimisation.

The watchdog has also recommended the Victorian Public Sector Commission consider implementing a ban on public sector employees receiving gifts or benefits from a prospective supplier.

It said it would seek advice from the Office of Public Prosecutions.

In a statement, the Department of Education and Training secretary Gill Callister said the patterns of behaviour exposed by the watchdog's investigation were completely unacceptable.

"Many people within the Department and our school communities will feel greatly let down by the people they were entitled to trust," she said in a statement.

Ms Callister said tthe senior executives and employees involved had either been dismissed or resigned from the Department.

She said the Department had already moved to improve its transparency and accountability.

A whistle blower service to support staff report suspected fraud and corruption has been set up within the department, and an integrity and assurance division has been established with a specialist fraud and corruption investigation team.