Deloitte's AI error exposes a weakness government buyers can fix
Deloitte Australia has apologised after a government report it produced was found to contain AI-generated mistakes. The firm said the errors came from the use of AI and that its internal review and oversight processes were not followed. The report was reissued, and Deloitte said personnel will be disciplined.
For government teams, this is not a headline to scroll past. It's a signal to tighten vendor controls for any deliverable that may use AI-reports, analysis, transcripts, or data summaries.
What happened, in plain terms
The consulting firm initially suggested a transcription issue. It later acknowledged the errors were AI-related and that required checks were skipped. The firm has apologised and agreed to corrective steps, including reissuing the work and addressing staff accountability.
Why this matters for government buyers
AI is now embedded in delivery workflows, whether declared or not. If oversight lapses, errors slip into official documents, decisions, and public records. This incident shows that "we used standard processes" is not enough-you need verifiable proof of review and human accountability.
Immediate actions for agencies
- Require vendors to declare AI use in any deliverable (tools used, where, and why).
- Mandate human-in-the-loop review for facts, citations, names, dates, and numbers.
- Make source attribution non-negotiable (data, transcripts, references).
- Insist on error logs and rework trails for any AI-assisted sections.
- Set consequences for undisclosed AI use or skipped checks (fee reductions, rework at cost, termination for repeat issues).
- Run random spot checks on deliverables, not just acceptance tests.
Contract language to add now
- AI Use Declaration: Vendor must disclose AI systems used, at task level, before work begins and at submission.
- Verification Warranty: Vendor warrants that a qualified human verified all facts, citations, and calculations.
- Audit Rights: Agency may audit prompts, model versions, sources, and change logs, with redactions for IP where justified.
- Data Handling: No training on agency data; no external model sharing; documented red-team tests for sensitive content.
- Remedies: Fee abatement, mandatory reissue within set timeframes, and disciplinary escalation for material defects.
Operational guardrails to demand
- Two-layer review: author check plus independent reviewer sign-off for AI-assisted sections.
- Traceability: maintain a prompt-and-output log for any AI-generated draft that survives into final work.
- Source-first drafting: start from verifiable records; only use AI for summarisation after sources are attached.
- Named accountability: put names to each section and to the final approver.
If you detect AI-driven errors in a submission
- Freeze acceptance; request the AI Use Declaration and review logs.
- Pin down the source of error (tool, prompt, missing review, or data issue).
- Require a corrected version, a root-cause analysis, and a preventive plan before release.
- Apply contractual remedies if disclosure or review obligations were breached.
Industry is responding-don't wait for it
Major firms are promoting internal AI rules after this incident. That's welcome, but government standards must lead. Build requirements into your RFTs and evaluation criteria so every bidder competes on verified quality, not just promises.
Standards to anchor your approach
- Australian Government AI Ethics Principles for high-level expectations across fairness, privacy, and accountability.
Build team capability
AI literacy is now procurement hygiene. Train contract managers, policy teams, and QA reviewers on AI risk, disclosure, and verification so issues are caught before publication.
- Practical AI courses by job role to upskill reviewers and contract leads on the checks that matter.
The takeaway is simple: allow AI where it adds value, but demand transparency, human verification, and proof. Good vendors will welcome the clarity. Poor ones will fail fast-before their errors become your agency's problem.
Your membership also unlocks:
