Auditor to probe $3.53m cost of legal advice on PsiQuantum

The national audit office will probe the rapid increase in the cost of the federal government’s main due diligence contract for its controversial investment in Californian quantum startup PsiQuantum.

Auditor-General Rona Mellor will examine the contract with law firm King & Wood Mallesons as part of its annual financial audit program, after it snowballed to $3.53 million in less than 12 months.

The contract – the largest of seven engagements with legal firms, probity advisers and management consultants for due diligence on the PsiQuantum investment – was first signed in July 2023 for just $282,300.

It supported earlier due diligence conducted by the Queensland government more than a year before the $940 million deal announced in April that will see PsiQuantum stage its attempts to build the world’s first usable quantum computer in Queensland.

Liberal senator Andrew Bragg wrote to the Australian National Audit Office seeking an audit of the contract earlier this month after officials from the DISR played down the issue at Senate Estimates.

“I note the AusTender website displays there have been amendments to increase the maximum value of the contract nine times, with the most recent revision occurring on 28 May 2024,” he said in a letter to the ANAO seen by

Since the letter, the contract has increased by a further $247,500, bringing the total value to $3.53 million over a period 15 months of legal work. The end date has also been extended to October 31, 2024.

Senator Bragg’s chief concern relates to the “lack of engagement” over the contract revisions by DISR’s new chief legal counsel and division head for legal and integrity, Janean Richards.

Ms Richards, who took up the role in mid-May this year, told Senate Estimates that she has not had “personal engagement or been involved in the contract set up with King & Wood Mallesons”.

Anthony McGregor, the head of DISR’s Technology Investment Taskforce, also insists the “contract was entered into on the expectation that it would be a phased arrangement” and that the steep increase is due to unknowns with the project.

“There were a number of elements of the project that at that point were not known, including whether the government would proceed with an investment,” he said earlier this month.

But, according to Mr Bragg’s letter first reported by The Australian, this “indicates an inappropriate governance structure for the management of this contract”, given the “significant expenditure of taxpayer funds”

In a letter to Senator Bragg on Thursday, Ms Mellor ruled out a separate audit but said the contract with King & Wood Mallesons would be considered as part of the government’s annual financial audit.

“Payments made by the Commonwealth, including in relation to legal matters, are subject to financial audit by the ANAO. The matters raised in your letter will be examined in the course of the ANAO’s 2023-24 financial statements audit of DISR,” she said.

Mr Mellor said the report is expected to be tabled in Parliament in December.

Do you know more? Contact James Riley via Email.

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