Government owes hotel quarantine security firms more than $10 million

The Victorian government is withholding more than $10 million in payments claimed by the security companies it engaged to guard returned travellers at Melbourne’s quarantine hotels.

Although Unified Security, MSS and Wilson Security finished work on the program almost two months ago, the government is seeking further validation from the companies about some claims before making further payments.

Masked workers inside the Stamford hotel during the quarantine program.Credit:Getty Images

The Age can reveal the total cost of using private security to guard quarantine hotels was more than $60 million. Industry sources aware of the negotiations between the government and the companies have confirmed the $60 million figure and said that more than $10 million of this in dispute.

The revelation comes as Unified Security told the ongoing inquiry into hotel quarantine on Thursday that police and the Defence Force should have been involved in Victoria, rather than having private security in the lead role.

The company has been providing guards for the program in NSW, where police have the lead enforcement role, while the Defence Force oversees the arrival and exit of detainees.

"[NSW Police] play that lead authorised officer role, and it seems to work far more effectively," Unified's national operations manager Nigel Coppick said.

Victoria Police, which the inquiry heard preferred private security as the "first line of security", will be questioned in hearings on Friday.

Instead of fulfilling its objective of preventing transmission from expats and travellers returning from overseas, COVID-19 spread from hotel quarantine in May to a hotel worker and security guards and into the community.

A spokeswoman for Wilson Security said the company was awaiting the payment of a "significant amount" by the government. However, she said its employees and subcontractors had been paid by the company.

MSS, which provided security at five hotels, including the Stamford Plaza, where there was an outbreak among guards in June, has confirmed it was awaiting a substantial sum.

Unified Security’s Nigel Coppick before the hotel quarantine inquiry on Thursday.

The government’s main contractor, Unified Security, placed 1754 guards, hired largely through subcontractors, across 13 quarantine hotels at a cost of at least $30 million.

Asked in the inquiry on Thursday if the government ever asked if the company risked overextending itself in outsourcing so much of its work, Mr Coppick replied: "We were comfortable with our abilities and we delivered."

Unified declined to answer questions about whether it had been paid in full. But sources aware of the negotiations between the government and the companies said some money had been withheld from Unified.

A government spokesman declined to answer questions, saying the board of inquiry had been established to examine issues related to the hotel quarantine program.

Subcontractors also told the inquiry this week they provided work at minimal profit margins.

"It really was about survival," Black Tie Security's director Rob Paciocco said.

"I wouldn't dream of operating at 3 per cent ever, but you know, as I said, this wasn't about making money, it was about trying to keep some people employed."

Sterling Services Group (SSG), contracted by Unified Security to fill more than 4000 shifts at 13 hotels, including the Rydges on Swanston, told the inquiry it had not received any remuneration.

SSG was accused of overbilling Unified, calling in guards to work a 12-hour shift, but sending them home early and still charging the head contractor.

SSG director Sam Aggarwal said this didn't happen. SSG and several security companies told the inquiry that the number of returned travellers arriving were often difficult to predict, so, when there'd be excess guards, they'd send them home but still pay them for four hours' work.

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