The awarding of an $80,000 contract to service navy lifejackets to a company that Labour says has links with the air force is being investigated by the auditor-general.
The interim contract was awarded to MilTech New Zealand in February after the Defence Force decided the service should no longer be performed in-house.
Labour defence spokesman Phil Goff raised concerns yesterday, claiming that Defence Force personnel had a financial stake in MilTech.
Defence Minister Jonathan Coleman yesterday confirmed that he had asked the auditor-general to investigate after he was told of "a potential breach of NZDF regulations involving serving personnel and a commercial operation".
"The auditor-general is the most appropriate channel to investigate this issue.
"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 would not comment further while the matter was being investigated, but told Parliament yesterday that he was "very concerned about what I read".
Goff said the "principals" of MilTech were air force employees who worked in the same area for which MilTech had been contracted "and that to me creates a conflict of interest".
MilTech's operations manager, Richard Mosley, declined to comment on the matter.
- The Dominion Post
Will Judith Collins' resignation hurt National at the polls?Related story: Judith Collins resigns, says she's a victim