A $1.7 million contract awarded to a social policy research consultant is under investigation after a senior departmental official found he failed to comply with internal bidding process.

Much of the research, which Guardian Australia has sought under freedom of information laws, remains secret because the department decided that disclosure could harm the business interests of Boston Consulting Group (BCG).

Chairman of the Labor Party Katy Gallagherwho first raised the issue in parliament 15 months ago, told Senate Estimates on Thursday that it appeared ministry officials had repeatedly misled the Senate about it.

Gallagher, who previously told parliament the contract looked “shady”, said she was considering a referral to the privileges committee.

It is a $1.7 million extension of a contract awarded to Boston Consulting Group, which officials declined to disclose or explain in detail. The initial contract, worth approximately $1.6 million, was for a report on the Employment Services for Persons with Disabilities program.

The damning BCG report, which officials initially refused to release to Senate estimates, was eventually made public. Guardian Australia under FOI laws.

Officials declined to give many details about what Boston Consulting Group was paid for the additional $1.7 million, except to say it was “additional policy research” regarding people with “capacity.” partial to work”. An official previously insisted that no report had been provided by BCG.

However, in December, the department released about 300 research slides, including an “executive summary.” Still, most of the pages are redacted, with the department arguing that publishing the research could harm BCG’s commercial interests by disclosing its modeling methodologies.

Ray Griggthe secretary of the Department of Social Services, told Senate Estimates he was investigating the tender, including whether Commonwealth procurement rules had been breached.

Griggs acknowledged there had been “non-compliance with internal processes” and “less than best practice” with Commonwealth procurement rules.

Griggs said he has taken a number of steps to tighten up the department’s procurement processes.

He also promised to investigate whether the FOI ruling used to remove the search was correct.