Australia’s outgoing chief scientist Cathy Foley initially doubted the claims of Californian startup PsiQuantum in its unsolicited proposal to the federal government and was “put off by the ‘salesman’ push”, new documents reveal.
But in the space of a year, and after an extensive due diligence process that included a site visit, Dr Foley was convinced that the company was on track to build a fault-tolerant, error-corrected computer and could create a “real quantum industry” in Australia.
“This is a high risk, high return venture but one that would position Australia as truly deep tech country that has a focus,” she said of the opportunity in December 2023, describing it as another “PV [photovoltaics] moment” for Australia.
Details of the change of heart are contained in a cache of heavily redacted documents released to the Senate on Wednesday following an order for the production of documents (OPD) by Liberal Senator Maria Kovacic last month.
It is the second OPD related to PsiQuantum since the federal and Queensland governments announced a joint $940 million investment in the company in April.
Persistent criticism has been leveled at the deal – and the secretive EoI process and costly due diligence process that preceded it – over the last six months, with the Coalition describing it as a captain’s pick that was reverse engineered to benefit the company.
The government maintains that the deal will position the country’s economy for the future and that not securing access to a frontier technology through PsiQuantum would repeat the missed technology opportunities of the 1990s.
But the newly released documents make clear that when Dr Foley, a renowned quantum physicist, was first presented with PsiQuantum’s unsolicited proposal, she was less than enthusiastic.
“When I was first asked about this company’s unsolicited submission for support, I was sceptical about their capability and their ability to deliver,” she wrote in an email to Department of Industry, Science and Resources deputy secretary Helen Wilson in December 2023.
In earlier advice in November 2022, Dr Foley said that “at this stage all architectures have strengths and weaknesses and different technical challenges”, referring to PsiQuantum’s photonics-based approach, and that “it is too early to say one is better than another”.
Dr Foley also said she was “put off by the ‘salesman’ push and lack of detail in the information provide (sic) and how it was presented”, so she “really dug in and was very negative, giving the company a pretty hard time about this as an investment…”.
“PsiQuantum is as well placed as any QC developer to deliver a quantum computer sometime in the future. It is an optimistic goal to achieve that by [Redacted]. They have a very large number of technical milestones to meet still.”
Only after “many months” of due diligence by the Technical Advisory Group (TAG), did she change her opinion to “support this as an opportunity”, while assuring Ms Wilson that she has “not drunk the cool aid”.
She said the budding local quantum sector was missing a “big Australian company setting up the most plausible of quantum computers under development with the near term timeframe”, echoing comments last month.
“This is one opportunity that will mean Australia has a real quantum industry at a global scale that will be world leading. It is unusual for Australia to be in this situation,” Dr Foley said.
“Having this big company in Australia will attract the supply chains here and provide an uplift in adjacent industries such as photonics (which Australia has a largely hidden $4.3b per year – in 2018 – industry) and semiconductors…”
Site visit confirmed PsiQuantum’s claims
Prior to coming to this decision, the TAG had recommended a site visit as the technical due diligence process had not provided “sufficient clarity or technical details” to assess PsiQuantum’s “claimed achievements”.
The TAG, which assessed PsiQuantum’s technology, systems and integration risks, included Dr Foley and officials from DSIR, Defence Science and Technology Group, CSIRO and the Department of Finance.
Documents reveal a team of two from DSTG and DISR’s National Measurement Institute visited PsiQuantum’s facility in the United States over two days in October 2023 for more information.
“The visit sought to increase confidence in the assessment of PsiQuantum’s project proposal and the associated technical, systems and integration risk by verifying these issues firsthand…” the site visit report states.
PsiQuantum was judged to have “demonstrated the necessary capacity, technical expertise and established facilities and systems to pursue its technology roadmap” by the assessors, who were able to “verify and validate claims made by PsiQuantum”.
Companies invited to participate in the EoI that took place six months after non-binding commercial discussions and due diligence with PsiQuantum had already begun were not given the same luxury.
As previously reported by InnovationAus.com, all five alternate proposals were ruled out by the Evaluation Assessment Panel consisting of DISR, DSTG and Finance officials in just 10 days.
The EOI evaluation report, also released in redacted form on Wednesday, shows the panel thought that none of the submissions were “highly competitive” or “competitive”. Some were considered “borderline”.
Other documents released as part of the OPD include a redacted copy of the draft quantum strategy, previously obtained by InnovationAus.com, as well as the heavily redacted TAG due diligence report for PsiQuantum.
Industry and Science minister Ed Husic has claimed public interest immunity over much of the information within the documents, arguing that it would be “contrary to the public interest” to release it.
“I have judged that the disclosure of certain information in these documents would cause material harm to companies, revealing closely held technical capabilities, assessment of progress relative to competitors, and other commercially sensitive information,” he said in a letter published alongside the documents.
Mr Husic claimed public interest immunity over another batch of documents relating to correspondence with PsiQuantum, lobbyists Brookline Advisory and research outfit Mandala in April.
Shadow science minister Paul Fletcher said the culture of secrecy around the $1 billion deal almost six months after it was announced is “disgraceful”, calling for greater transparency from the government.
“This deal was announced almost six months ago and Ed Husic still refuses to reveal crucial details around its commercial arrangements and the terrible process followed,” he said.
“This ongoing culture of poor transparency and dodging scrutiny is disgraceful and must end. It shouldn’t take a Senate OPD to find answers.”
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