$1 billion visa tender decision delayed amid political conflicts of interest

A decision on the politically sensitive tender process for a $1 billion plan to outsource Australia's visa processing will not be made until the new year, amid a tangled web of conflicts within the federal government.

The Department of Home Affairs is in the final stages of determining the successful bidder for the project to build and manage a new online system to process and provide visas for more than 9 million applicants a year.

The Department of Home Affairs is determining the successful bidder for a project to build and manage a new online system to process and provide visas.

Industry sources have told The Age and The Sydney Morning Herald that continued delays with the project, first flagged in 2017, are risking the system not being complete and implemented before the next election.

The extended timeline for a decision, which was originally slated to be made by October this year, was also costing each bid tens of millions of dollars the longer it went on, one source said.

The two shortlisted bidders are Australian Visa Processing – a consortium consisting of Ellerston Capital, PwC, Qantas Ventures, NAB and Pacific Blue Capital – and a joint proposal between Australia Post and Accenture.

Another source closely linked to one bidder said any further delays would only aid the fierce campaign being run against outsourcing the process by Labor and the Greens.

Immigration Minister David Coleman, right, and Scott Morrison both recused themselves from expenditure review committee and cabinet discussions on the issue.Credit: Alex Ellinghausen

The tender bid, managed by the department, is now at arm's length from Prime Minister Scott Morrison and Immigration Minister David Coleman because of their long personal and professional relationships with Scott Briggs, who is leading the Australian Visa Processing consortium.

The pair have recused themselves from expenditure review committee and cabinet discussions on the issue and will not be part of the process once the department makes its final recommendation to Home Affairs Minister Peter Dutton.

Mr Briggs, a former NSW Liberal deputy state director, was closely linked to Mr Morrison's leadership bid against Mr Dutton in August last year and was a former colleague of Mr Coleman at Nine Entertainment Co.

One industry source said there was a "spectre of Dutton versus Morrison" hanging over the bid, but senior government figures have told The Age and The Herald there was "no bad blood" from last August and Mr Dutton had been "totally professional" during the process.

Senior government sources have conceded the government will "cop some flack" should the bid led by Mr Briggs be successful, but have stressed the decision will be "truly independently made".

Kristina Keneally with her husband Ben, who is employed by Boston Consulting Group, which is advising the department on process.Credit: Alex Ellinghausen

Adding to the political conflicts, opposition home affairs spokeswoman Kristina Keneally's husband, Ben, is employed by Boston Consulting Group, which is advising the department on process.

Senator Keneally has not declared a conflict of interest partly because Mr Keneally does not work on BCG's Commonwealth public sector projects, but she has handed responsibility for prosecuting the campaign against the visa processing change to opposition assistant spokesman for immigration and citizenship Andrew Giles.

Opponents of the scheme have said the changes will damage the integrity of Australia's visa and citizenship system and increase the costs to applicants.

Home Affairs confirmed last month that more than $80 million had been spent so far on the design and procurement for the new system.

The visa system currently involves more than 50 different computer systems, two of which are more than 25 years old.

The government provided $72 million in funding last year to "progress the design and delivery" of the new platform. A further $185 million was provided to the department in the 2017 budget to reform Australia's visa processing arrangements.

At least $2 million of this was used by the two bidders shortlisted from the original 16 bidders to participate in a co-design phase of the procurement.