Two inquiries have begun into the award of an $80,000 military contract after the Defence Minister was told the private company doing the work was owned and run by serving personnel.

The contract for maintenance of lifejackets was let to a private firm, Miltech, after the Defence Force accepted it no longer had the capacity to do the work.

But it has now emerged the owner of Miltech when the contract was awarded was senior air force non-commissioned officer Graham Berry -- whose job is to oversee the same maintenance division where it was no longer "viable" to carry out lifejacket maintenance.

Other defence staff working in the maintenance division, or former staff who have recently left the air force, have also been linked to the Miltech operation, the Herald has learned.


Maintenance was a key focus in the inquiry into the death of Private Michael Ross, the soldier who drowned during a training exercise near Waiouru because his lifejacket failed to inflate. Inquiries later found the gas canister meant to inflate it was empty.

Defence Minister Jonathan Coleman said yesterday he was "very concerned" after being briefed on the Miltech contract.

Dr Coleman said he was briefed a fortnight ago about "a potential breach of NZDF regulations involving serving personnel and a commercial operation".

He said he asked the Auditor-General to investigate the same day.

"It is important to confirm whether any inappropriate activity occurred, and that the NZDF systems are appropriate and effective in recognising and managing potential conflicts of interest."

He was briefed three weeks after the Herald began probing the arrangement.

An internal inquiry is also under way. A Defence spokeswoman said: "The NZDF has begun an internal investigation to ensure our expected high standards of probity were followed in this case."

Defence told the Herald Miltech was awarded a short-term $80,000 contract in February after Defence found "in-house maintenance support" of the navy's lifejackets was "no longer a viable option".

Defence said the contract was intended to be a "stop-gap" solution until a way to service lifejackets across the military had been found. It said no Defence equipment was used by Miltech to fulfil the contract.

Miltech's operations manager, Richard Mosley, said yesterday that he had "no idea" about any inquiry into the company.

Mr Mosley was listed as the shareholder of Miltech a week ago, taking over the shareholding from Mr Berry.

Labour defence spokesman Phil Goff quizzed Dr Coleman in Parliament yesterday over the Miltech contract.

He asked whether it was being investigated "because it may not be certified to provide services ... and because there were huge conflicts of interest".

Mr Goff told the Herald he had questioned Dr Coleman but had not had answers. "The fact he has referred this matter to the Auditor-General means he is having trouble answering my questions in a way that satisfies him appropriately."