The Papua New Guinea Government says it wants security company Paladin's contract to work on Manus to be terminated at the end of the month, despite the Home Affairs Minister saying it would likely be extended.

Key points: PNG's Immigration and Border Security Minister said the country's chief migration officer had written to the Home Affairs Department about it ending the contract

PNG's Immigration and Border Security Minister said the country's chief migration officer had written to the Home Affairs Department about it ending the contract Peter Dutton didn't specify when asked if arrangements were being put in place for PNG to take over services on Manus

Peter Dutton didn't specify when asked if arrangements were being put in place for PNG to take over services on Manus The Home Affairs Department previously defended the awarding of the contract to Paladin

The $423 million contract with the security company is currently being investigated by the Auditor-General and ends in two weeks.

PNG Immigration and Border Security Minister Petrus Thomas said the country's chief migration officer had written to the Home Affairs Department about it through the High Commission in Port Moresby.

"[The] PNG Government's position is to … terminate the Paladin contract by the end of this month," he said.

"[The PNG Government] wants a transparent tender process."

Guards being confronted by protesters while locking the gates on Manus Island in 2017. ( ABC News: Eric Tlozek )

The Minister said his Government would "strongly recommend" local involvement, saying PNG companies "now have the capacity and expertise to do the job and should be given the opportunity to participate".

Just a day earlier, Home Affairs Minister Peter Dutton said the "likely arrangement is that there will be a continuation" of the contract.

He said the matter was being handled by his department.

"They have obviously got people on their panel, they've obviously got contracting arrangements, and they will look at the history of the people who are applying, the suitability for them to provide services, and they will make judgements based on that," he said.

"Services need to be provided."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 50 seconds 1 m 50 s Peter Dutton says he wants people off Manus and Nauru but has yet to outline a plan. ( ABC News )

He did not specify when asked if arrangements were being put in place for PNG to take over the services.

"The department will work with the PNG authorities. We've got to make sure we're getting value for money," he said.

There has been ongoing scrutiny of how little-known security firm Paladin obtained the contract to provide security and other services for the refugees and non-refugees in Papua New Guinea.

The Home Affairs Department has previously defended the awarding of the contract, which was done under a so-called "special measure" provision because there was not enough time for an open tender.

Home Affairs secretary Michael Pezzullo told a Senate hearing in February that the PNG Government was planning to take over responsibility for the services in October 2017, but in July that year decided it could not proceed because it was in caretaker mode ahead of its election.

Mike Pezzullo (left) originally said PNG was going to take over services on Manus. ( ABC News: Marco Catalano )

"My very strong preference would have been to have a long lead time, an open tender, a global search assisted by specialised consultants and advisers," Mr Pezzullo said.

"That plan held fast until mid-2017 when the sovereign state of PNG advised us, 'We don't intend to proceed'.

"We were dealing with an urgent situation but were never desperate in doing so."

Opposition Leader Anthony Albanese said Mr Dutton's comments about extending the contract were concerning.

"We will be raising further questions in Senate estimates about the value for money — that's the concern here," he told reporters in Darwin.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 3 seconds 1 m 3 s Labor says the Government must explain the Paladin contract

It has been almost six years since the asylum seekers were first brought to PNG. They have been living in accommodation centres in the local community, which are guarded, since the detention centre was closed in late 2017.