The Department of Social Services (DSS) employed more contractors in the 2025-26 financial year while it shed hundreds of internal staff, according to budget documents.
And one of the biggest winners from this move was a labour hire company that has faced criticism for a lack of transparency on worker pay.
The DSS's headcount decreased by 38.3 per cent to 2475 between June 30, 2025, and 2026, while the number of contractors grew from 259 to 283.
This caused the percentage of people working as contractors in the department to surge from 6.8 per cent to 10.3 per cent.
The news came after The Canberra Times reported that nearly 150 middle managers left the DSS in the 2025-26 financial year.
Its growing reliance on contractors could be a taste of what's to come, given the DSS granted a handful of companies multimillion-dollar contract variations towards the end of the 2025-26 financial year.
Chandler MacLeod Group Limited, for example, received a $17.2 million contract extension for labour hire on June 18, according to documents published on AusTender.
The company's website promotes its "temporary labour hire (services), permanent recruitment, and volume hiring for the Australian federal government".
A parliamentary inquiry on the current capability of the APS in 2021 scrutinised labour hire arrangements in which Chandler MacLeod was paid $37.1 million over three years by the National Disability Insurance Agency (NDIA).
The NDIA did not have any visibility of what labour hire workers employed by the company were being paid, the committee heard.
More recently, the Fair Work Commission found in 2025 that Chandler MacLeod staff working at BHP sites were paid substantially less than their in-house counterparts.
Other labour hire companies that benefited from the DSS' end of financial year rush to approve major contract variations include DFP Recruitment, whose $20.3 million amendment was executed on June 17, and Gillian Beaumont Recruitment Pty Ltd. The latter's $17.1 million contract extension was signed off on June 22.
Most of the department's contractors - 247 of 301 at August 31 - were assisting with the national redress scheme for survivors of institutional child sexual abuse, according to a departmental source.
Responding to questions on contractor numbers and Chandler MacLeod in particular, a DSS spokesperson said the department took its responsibility in making a difference for Australian families, individuals and communities seriously.
"We have gone through a period of change to realign our work to better support our priorities, including breaking cycles of entrenched disadvantage and reducing rates of domestic, family and sexual violence," the spokesperson said.
"This change included workforce measures to align the department's operating model and staffing with available funding.
"The department continues to operate in line with the APS strategic commissioning framework.
"Core work is undertaken in-house wherever possible, with external support engaged only in limited and appropriate circumstances."
Greens spokesperson for finance, employment and workplace relations Senator Barbara Pocock has advocated for greater transparency in contracting and capability-building in the APS.
Senator Pocock said Chandler MacLeod's initial contract - signed in August 2024 - was for $4.9 million, but it had blown out to nine times that figure.
"Why is the government outsourcing work at three times the cost of the public service?" she said. "This isn't value for money or how you rebuild the public service.
"Past senate inquiries have shown that land-and-expand tactics, profiteering, and poor value for money are rife within the consulting sector.
"They get a foot in the door with a minor contract that they leverage to expand so they can expand their massive earnings.
"This is a lucrative strategy with wide 'back end' profit margins.
"When a consulting firm makes more from contract amendments than from the initial contract itself, it's a clear sign the system isn't working as it should be.
"Successive senate inquiries have exposed a consulting sector where contract creep, excessive profits and poor value for money have become recurring themes.
"If there is new work then there should be transparency about its nature and a new contract that permits real competition, rather than expansions to an existing contractor especially when the add-ons are substantial."
Chandler MacLeod did not respond to a request for comment.
