Big agencies pushed an extra $500 million out the door in June, new data shows, in an end-of-financial-year splurge at odds with the government's crackdown on outsourcing.
Defence's biggest-spending group, the Tax Office and three other agencies signed off contracts worth $4.92 billion in the last month of 2025-26.
Their spend was up 13 per cent on June 2025, and a staggering 220 per cent up on the outsourcing figure for June 2024, according to data from AwardedTenders.
'Use it or lose it' rules mean agencies typically rush to spend the rest of their yearly budgets in June, but the bigger splurge in 2026 was at odds with the federal government's commitment to reduce spending on contractors, consultants and labour hire.
The Canberra Times reported in December that more than a third of agencies only partially met or did not meet their insourcing targets in 2024-25.
The government later dropped specific financial targets, while still pushing agencies to reduce their private sector spend.
Defence's capability acquisition and sustainment group spent the most in June 2026 of the five agencies sampled ($3.62bn), while the Tax Office recorded the biggest increase, with a 172 per cent jump on June 2025 to $375m.
One contract extension or option made up almost half of the Tax Office's end of financial year spend, for software from IBM Australia, signed off on June 29.
On the other hand, EOFY spending on external contractors shrank between 2025 and 2026 at Home Affairs (39.5 per cent down), Social Services (39.7 per cent down) and Services Australia (35.7 per cent down).
Finance and public service Minister Katy Gallagher has fronted the federal government's push to cut outsourcing, as the minister responsible for its APS reform agenda.
Minister Gallagher's office did not respond to questions by deadline, but a Department of Finance spokesperson said the commonwealth procurement framework was a devolved framework.
"Finance has no visibility of factors influencing the number and value of contracts signed by entities in June," the spokesperson said.
"Any questions regarding specific contracts should be directed to the entity itself."
An Australian Taxation Office spokesperson said it conducted all procurement activities in accordance with the Commonwealth procurement rules and had strong procurement, probity, and governance controls in place.
"The total value of contracts gazetted on AusTender can fluctuate from period to period based on the timing and nature of procurement activities required to support the ATO's operational and strategic priorities," the spokesperson said.
"Contracts executed during June 2026 reflect normal procurement activity undertaken to support the ATO's operational responsibilities and priority program delivery.
"These contracts cover a range of goods and services, including accommodation leases, property management services, software licensing, mainframe services, and specialist ICT expertise required to deliver priority programs.
"The ATO is committed to reducing reliance on outsourced service delivery and bringing core work in-house where appropriate, in line with the APS strategic commissioning framework."
A Department of Defence spokesperson said the 2026 national defence strategy and 2026 integrated investment program provided an additional $117 billion in investment for Defence over the decade to 2035-36.
"Defence continues to review its use of contractors ensuring that strategic priority and value for money is achieved."
