The six-month contract extension for Paladin, the controversial company providing services to refugees on the Papua New Guinea island of Manus, is worth $US77 million.
The Australian newspaper reported Home Affairs Minister Peter Dutton signed off on the extension at the end of June, despite the company's original $US300 million contract being the subject of a review by the Australian Senate.
The Papua New Guinea government has called for a local company to be awarded the contract, and during a joint news conference of the two nations' leaders this week, Scott Morrison said the extension would allow a new company to "step up".
"We're working very closely together with the PNG government, in terms of the service arrangements which continue for those who continue to be resident on Manus Island," Mr Morrison said.
"That includes a tender process on the contract which has had a lot of attention here, which we mutually agreed would be put in place and the existing contract extended until that tender process had been completed to allow a new service provider to step up."
The Australian reported that over the life of the deal, Paladin would make about $US14 million a week.
If you were honest you wouldn’t give hundreds of millions of dollars to private companies in Manus, when you could have spent just $1m to fix the local hospital and save many local lives in this island. https://t.co/NIOllllAkU— Behrouz Boochani (@BehrouzBoochani) July 23, 2019
A statement released by the PNG government after a bilateral meeting this week said Australia supported PNG's intent to see services provided by local companies selected through an open and transparent tender process.
"Both countries are committed to ensuring that a successful transition arrangement is expeditiously in place. Together, we share a commitment to support the economic aspirations of Manusians through our development and vocational education cooperation."
Meanwhile, Mr Dutton has rejected a Senate order to hand over documents related to the Paladin contract.
In a letter to Senate President Scott Ryan, Mr Dutton said "tens of thousands of documents are potentially in scope of the Order", and "compliance with the Order would result in an unreasonable diversion of significant resources".
A revised date of 23 August has been agreed to hand over the documents and negotiations for their scope is ongoing, he said.