The national watchdog will investigate the federal government’s contract with a major law firm to provide legal advice on its near-$1 billion PsiQuantum deal after it increased by more than 10 times in just nine months.

The federal and Queensland governments earlier this year announced a $940 million investment in US firm PsiQuantum that will see it base its attempt to build a fault-tolerant quantum computer in Brisbane.

The funding will be equally split between the governments, with the Commonwealth’s portion to include a $189.5 million equity investment.

In August last year the federal government signed a contract worth $282,300 with law firm King & Wood Mallesons to support “legal due diligence”.

At that time, the government had just issued an expression of interest to the local quantum industry while it was also engaged in high-level discussions with PsiQuantum.

In the nine months since the deal was signed, its value has ballooned to $3.3 million across nine contract variations.

Liberal Senator Andrew Bragg wrote to acting Auditor-General Rona Mellor requesting the Australian National Audit Office (ANAO) look into the “appropriateness” of this contract and whether it is an “efficient, effective, economical and ethical” use of public money.

Last week Mellor wrote back to the Senator and said the contract would be investigated as part of the audit office’s financial year review, as first reported by The Australian.

“Payments made by the Commonwealth, including in relation to legal matters, are subject to financial audit by the ANAO,” Mellor said in the letter.

“The matters raised in your letter will be examined in the course of the ANAO’s 2023-24 financial statement audit of the Department of Industry, Science and Resources.”

This report will be tabled in Parliament in December this year.

A spokesperson for the Industry Department said that King & Wood Mallesons was “engaged to support legal due diligence” and that it was increased in value as “each phase of due diligence increased in intensity and depth”.

The recent federal budget also revealed that the Commonwealth will spend more than $2.5 million annually to manage the contract with PsiQuantum.

Queensland quantum grants

The Queensland government has also opened a round of funding for quantum projects worth about $50 million, about 10 per cent of what it will be investing in PsiQuantum.

This funding is split across five categories with a focus on enhancing tech applications, attracting investment and collaboration, developing a skilled workforce, aiding decarbonisation and promoting quantum-based innovations in sportstech in the lead up to the 2032 Olympics in Brisbane.

“The Miles government is committed to quantum science and to positioning Queensland as a major centre of quantum technology development in Australia and the Asia-Pacific,” Queensland Minister for Science and Innovation Leanne Linard said.

“Quantum science and technology has the potential to bring millions of dollars in economic opportunity to our state and deliver thousands of high-paying tech jobs.

“These new grant programs further cement Queensland’s reputation as a global leader in quantum, attract and retain skills in quantum science, and use quantum technologies to help solve challenges such as improved renewable energy technologies and combating climate change.”

The scheme will see $20 million dished out to the Quantum Commercialisation Infrastructure Program, which will help to build infrastructure and a commercial pipeline of quantum and advanced technologies systems, devices and components, and $15 million for a fund to attract new investments and foster collaboration in the sector.

A further $10 million will go towards the Quantum Decarbonisation Mission, $5 million for the sportstech grants and $3.81 million for the Quantum and Advanced Technologies Talent Building Program, which will focus on the quantum workforce in the state.