The Morrison government insists controversial contract negotiations for immigration centre services in Papua New Guinea are being done by bureaucrats at arm's length from ministers.
Paladin's contract for garrison services at the immigration centres on Manus Island - awarded in a closed tender process - runs out at the end of June.
Home Affairs Minister Peter Dutton says it is likely to be continued, although the PNG government wants it to go to another firm.
Labor has leapt on Mr Dutton's admission, questioning how the government can guarantee value for taxpayer money.
Opposition Leader Anthony Albanese says the minister's statement was extraordinary given contract negotiations were supposed to be ongoing.
"How's that for negotiation on behalf of Australian taxpayers on the part of Peter Dutton?", he told reporters in Darwin on Monday.
"The concern here is that when taxpayers' money is being used we should expect the government to be ensuring that there is value for money."
But Finance Minister Mathias Cormann says the matter is one entirely for the department.
"That is a contract that is being handled appropriately at arm's length from the government by the Department of Home Affairs," he told reporters in Perth.
"These sorts of procurement appropriately are dealt with by relevant departments."
Paladin, whose Australian arm was registered to a beach shack on Kangaroo Island until earlier this year, was awarded the $423 million contract in 2017 through a closed tender process.
Government documents show the end date for its contract was extended in October and again in January, but it is now due to expire on June 30.
There were still 391 people in the Australian-run centres on Manus Island at the end of February.
The auditor-general is now examining whether Home Affairs appropriately managed the procurement process when it chose Paladin in 2017, but his report isn't expected to be tabled until January.
The company has rejected suggestions of misconduct or corruption over the contract.
Home Affairs boss Michael Pezzullo told senators in February he would have preferred to have held a long, open tender process back in 2017 but the department had to move quickly after the PNG government pulled out of a plan to take on responsibility for services at the centres.
Now the PNG government is saying it wants a transparent tender process and would like more local involvement.
Immigration Minister Petrus Thomas has told media outlets he wants to see Paladin's contract ended or terminated by the end of June.
"Papua New Guinean companies now have the capacity and expertise to do the job and should be given the opportunity to participate," he told the Guardian.
Back in 2017, Mr Thomas flagged concerns about Paladin flying in Fijian workers to run the immigration facilities.
Paladin said in a statement the terms of its contract do not permit it to comment on any matters relating to its work on behalf of the Australian government in PNG.
"We are committed to delivering all of our projects to the highest professional and ethical standards as we have demonstrated throughout our work in PNG."
Australian Associated Press
