A company that was originally hired to run a call centre was roped into assessing grants for the Coalition's $220 million regional jobs program.
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The $3.15 million contract was also awarded without a tender or quotes from any other companies.
The Australian National Audit Office took aim at the Regional Jobs and Investment Packages on Tuesday, revealing ministers overruled department advice and approved nearly $80 million worth of grants, including one that was technically ineligible.
Labor MP Mike Kelly referred it to the audit office last April, amid concerns about pork barrelling in the ultra-marginal electorate of Gilmore on the NSW South Coast.
But the audit office said it also began looking into the program because the assessment process for the applications had been outsourced, which posed risks around quality and accountability.
Auditor-General Grant Hehir identified significant shortcomings with the arrangement.
The company had a deed of standing offer with the Department of Industry dating back to 2015 to provide call centre services. There was nothing in the arrangement that covered rates of work for grant application assessors, the auditor-general said.
The Industry Department didn't get any other quotes to deliver the program either, or benchmark the rates being paid, so it was not clear whether the $3.15 million contract was actually value for money.
Even the contract itself was incorrectly described on the Austender website as being for "professional recruitment services".
The auditor-general found applications were not soundly assessed in accordance with the program guidelines.
The eligibility requirements were not fully applied, and there were deficiencies in how the benefits of the proposals were assessed.
While the program was all about creating jobs, there was only a single line in the training manual about how contracted staff could assess each applicant's job creation claims.
A separate review of the grants program commissioned by the Department of Infrastructure found many of the claims about ongoing jobs created by the proposals were taken at face value.
It's a problem the audit office has uncovered with previous grants programs, also designed to create jobs.
The Infrastructure Department said future jobs claims would be scrutinised to a higher standard, following the recommendations from a report by the Centre for International Economics.
But even if there was more guidance in the training material, it may not have made a difference.
The audit office questioned the level of training provided to the contractors assessing the applications.
One person in a "quality specialist role" who undertook 96 reviews of eligibility assessments and 132 reviews of merit assessments had not even completed the training, according to the records.
The "frequency" with which ministers rejected the projects that had been recommended by the assessors was of note.
The ministerial panel deemed that more than 20 per cent of applications had been incorrectly scored by the assessors.
Most of the incorrect scores related to the level of net economic benefit the project was expected to deliver to the region.
The Infrastructure Department has now agreed to bringing in quality control in cases where ministers rejected high levels of advice, in order to ensure assessments are complying with agreed procedures.
But during the program, it took no steps to determine whether the incorrect scores were coming from certain assessors, or whether there was a systemic problem (the audit office found no evidence that particular assessors were the issue).
Labor's infrastructure spokeswoman Catherine King continued to needle the government over the program on Wednesday.
"The government's got some questions to answer in relation to this report. If it wants to grow regional communities, if it wants to make sure that we are treating regions the same then it actually needs to act on this report and explain how on earth it had a ministerial panel that came up with the decisions that it did," Ms King said.
But a spokeswoman for Infrastructure Minister Michael McCormack said despite the "cherry-picking" going on, the audit found no evidence of bias or pork barrelling.
"The Regional Jobs and Investment Packages help diversify regional economies, stimulate economic growth and deliver sustainable employment. The program is creating thousands of jobs in regional communities," his spokeswoman said.
"The significant majority of projects approved were in fact in line with advice provided by the department, however it is the responsibility and role of the panel to make considered decisions, not to just 'tick and flick' Department recommendations."
