A secret defence facility under construction at HMAS Harman outside Canberra has suffered a massive cost blowout.

The $163.5 million project is 80 per cent over its original budget and three years behind schedule, but has been exempted from parliamentary review on the grounds that it ''would not be in the public interest''.

The appearance of two large cranes at the HMAS Harman defence base has confirmed that work is under way on a new defence communications and intelligence centre.

However the ''HMAS Harman Communications Facility Project'' will cost taxpayers more than $70 million over its original projected cost of $90 million and will not be completed until some time next year.

Asked the nature and purpose of the facility, a Defence Department spokesperson said it will ''provide additional facilities to meet the needs of new network and computing capabilities being introduced''.

However, Defence ''approach to market'' documentation indicated in November 2007 that the project involves ''the extension to the existing Defence Network Operations Centre [at HMAS Harman] valued at approximately $40 million and the construction of a collocated but stand-alone communication/data-room facility valued at approximately $50 million.''

The original project timeframe planned by Defence anticipated that design and development activities would be finished by late 2008. Subject to ''government and parliamentary approval'', construction was planned to start in early 2009 with the facility expected to be complete by late 2010.

There have been no announcements from the Defence Department about the project, which in April 2009 was exempted by the federal Labor government from referral to the Federal Parliament's Joint Committee on Public Works on the grounds that parliamentary scrutiny would ''not be in the public interest''.

There has been no discussion of the project in Senate estimates committee hearings and the public reports of the parliament's Joint Committee on Intelligence and Security make no reference to it.

Described by the Defence Department as the hub for the third largest communications network in Australia after Telstra and Optus, the existing Defence Network Operations Centre at HMAS Harman was the subject of public works committee scrutiny and approval in 1996-97.

The Defence Department last week confirmed that the Labor government gave its final approval for the new communications facility project last December and that site works started in late January.

Information from the construction industry indicates that as late as last December Defence still estimated the total value of the project to be ''in the order of $135 million.'' However, published government contract details indicate that primary construction contractor John Holland was awarded contracts between November last year and March this year totalling more than $156.6 million. Rudds Consulting Engineers, engaged on design work since at least December 2010, have described the project as ''two related but quite separate large building projects ... under a very strict time frame.'' A spokesperson for Defence Minister Stephen Smith told Fairfax Media that Mr Smith has been briefed on ''the schedule and cost issues ... which resulted from the technical complexity and high performance requirements of the project''.

''The Minister for Defence expects that the project will be delivered on time and within the currently projected budget,'' the spokesperson said.

Coalition Defence spokesperson, Senator David Johnston said ''these cost blowouts come at the same time when there are dramatic cuts to the defence budget and are indicative of the two Ministers responsible, Defence Minister Smith and [Defence Materiel Minister Jason] Clare, being asleep at the wheel.''

The former Howard government exempted seven major defence and intelligence construction projects from scrutiny by the Federal Parliament's public works committee, most notably construction of ASIO's new central office overlooking Lake Burley Griffin. The new ASIO headquarters cost of $631 million represents a 37 per cent cost blowout above the Howard government's initial figure of $460 million.

Aside from the HMAS Harman communications facility, the Gillard government has excluded another six major construction projects from parliamentary review. These include office accommodation for the Defence Signals Directorate at Fairbairn and Russell Hill in Canberra, major defence facilities in the Middle East, office accommodation for the Office of National Assessments, and the Crisis Coordination Centre at the new headquarters of the Australian Federal Police.

Also excluded were ''defence facilities ... near Queenscliff, Victoria'' - an apparent reference to works at the Australian Secret Intelligence Service's training centre on Swan Island.

Public works committee chair Labor MP Janelle Saffin said that ''as a first principle'' all government construction should be subject to parliamentary scrutiny; ''we should examine the purpose, the cost, the schedules of projects on behalf of the taxpayer''.

Cost Blowout At Secret Defence Site