‘Possibly a sham’: Quantum EoI baited local market

The federal government has been accused of running a misleading quantum computing EoI that baited information from local players while commercial discussions with PsiQuantum were already well advanced.

Current and former politicians have spoken out about the process that led to the $940 million bet on the Californian-based startup, describing the EoI as “disingenuous” and “possibly a sham”.

The controversial investment by the federal and Queensland government will also have a “skewing” effect on the market, marking it harder for Australian companies to compete in their own backyard.

The comments come as the Department of Industry, Science and Resource (DISR) acquiesces to a freedom of information request to release the once secret EoI document in full.

A prototype of a PsiQuantum cabinet. Image: PsiQuantum

Former independent senator Rex Patrick sought the EoI in the wake of the April announcement that PsiQuantum would stage its attempts to build the world’s first usable quantum computer in Australia.

DISR refused to release the document through an earlier FOI request in January, when the government would not confirm the existence of the EoI, arguing that doing so would “compromise ongoing and future policy considerations”.

The document, published as the government signed contracts with PsiQuantum on Monday, reveals few new details about the process, but Mr Patrick says it is further evidence that investment in a local company was already largely decided.

“It is clear from the Senate’s examination of the PsiQuantum contracting process, and from FOIs, that the government had made up its mind to go with them before it went to industry with an EoI. That means the EoI was a disingenuous process.”

“It takes time and effort for companies to respond to these sorts of request. The government should have been up-front with them about what their plans were,” he told InnovationAus.com

Despite the government spending the best part of a year in early talks with PsiQuantum, the EoI makes no mention of that fact, and offers no indication of the quantum of investment on the table.

It only indicates the federal government “may approach other entities (including suppliers that have not responded to this EoI)” for information, and “may conduct other industry engagement activities and future procurement and grant processes”.

DISR secretary Meghan Quinn told a Senate Estimates hearing earlier this month that “probity and integrity issues and commercial confidentiality” meant there were restrictions on what could be included in the EoI.

As previously reported by InnovationAus.com, PsiQuantum was not invited to participate in the EoI, which was only drafted and issued after non-binding commercial discussions and due diligence on the company had already commenced.

The EoI called for 21 firms — which DISR declined to name last month — to offer information on the prospect of a “commercial-scale university fault tolerant quantum computer” being developed in Australia, “ideally by 2030, and preferably earlier”.

It closed in mid-September – the same month that the government began “intensive”, although non-binding, commercial discussions with PsiQuantum, Ms Quinn told Senate Estimates.

At the time, PsiQuantum was one of the few companies with a publicly stated ambition to deliver its first commercial quantum computer before 2030. Since the joint federal-Queensland investment decision, it has upgraded that timeline to 2027.

Information garnered from the EoI process, including around technology readiness and potential benefits to the economy, was used to “compare and contrast” with PsiQuantum information, Ms Quinn said earlier this month, creating a “level playing field”.

Independent MP Monique Ryan, one of several teals that have raised concerns with the PsiQuantum investment and its origins, said the document brings into question whether the government followed a “proper process”.

“The fact that Export Finance Australia started engaging with PsiQuantum the same month other quantum companies responded to the EoI suggest the process was possibly a sham,” Dr Ryan told InnovationAus.com.

“The [Industry] minister should tell us when exactly he decided the money would go to PsiQuantum: if he did so before even opening EoI, then this has been a process without integrity and due diligence.”

Mr Patrick, who has been on a mission to improve the FOI system since leaving Parliament, also said that the “disingenuous” EoI and subsequent investment in a single company had resulted in a skewed market.

“The result of the contract is that we have a government backed foreign entity skewing the domain here in Australia. That’s a shame. The government will need to work hard from here on in to make sure Australian Industry Participation is maximised,” he said.

Independent senator David Pocock welcomed the release of the EoI document, saying it was “good to see some more transparency around this really significant government investment”.

“Concerns raised around the process need to feed into broader reform around how the government manages procurement and creating genuine opportunities for sovereign Australian companies to win the really big work,” he said.

Mr Pocock attempted to obtain documents related to the government’s dealings with PsiQuantum earlier this year using an order for the production of documents in the Senate, but had it blocked on public interest grounds.

Earlier this week, the Australian Financial Review reported that the federal government had signed the final deal with PsiQuantum, including a near-$190 million equity investment in the company.

The figure aligns with early InnovationAus.com reporting on the EoI last year that flagged the equity investment would be in the region of $100 million to $200 million.

Remaining funding from the federal government will come in the form of a loan worth around $280 million. Last month’s federal Budget indicated the loan would be more than $200 million.

The breakdown of the Queensland government investment remains unclear but if it was to follow Canberra, it would deliver a $380 million boost to PsiQuantum.

Do you know more? Contact James Riley via Email.

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