Bureaucrats Barry Wells and Albert Ooi allegedly conspired over seven years between 2006 and 2013 to award government contracts for work such as bus shelter installations and railway station upgrades to family-run companies they had set up.

The two men directed about $25 million in public money to those companies and made personal profit of more than $3 million, the inquiry has heard. The dealings, which the inquiry has heard were only thinly disguised, are being investigated in the first public hearing of the Napthine government's Independent Broad-Based Anti-corruption Commission.

Greg Morrissy, a civil engineer whose company Tactile Australia was contracted by Mr Wells to deliver various transport projects for the department, told the commission hearing on Wednesday that he alerted Transport Department employees Sheena Clarke and Julian Perrin in conversations in 2008 or 2009 that Wells' and Ooi's sons owned a company that was doing contract work for the department.

The company, Global Works Management, frequently worked as a subcontractor to Tactile Australia, at the direction of Mr Wells.

"Sheena was busting our balls on a project on some of the work that Global had done, and so I had to come out and say, do you know that it's Barry and Albert's sons that have done this work?" Mr Morrissy told the hearing.

But he said nothing changed; Wells' stepson, Justin Wells, and Ooi's son-in-law, Michael Delatore, continued to win department contracts, even though the quality of their work was shoddy.

"I just think it went in one ear and out the other," Mr Morrissy said of his conversation with Ms Clarke. "I think she'd been told to get out there and kick some butt ... I don't think she understood the implications."

Mr Morrissy said he tipped off Ms Clarke because "we were bitter that they were getting the work".

Ms Clarke was not present for Wednesday's hearing but relayed to the court that she emphatically denied ever being told by Mr Morrissy that Mr Ooi and Mr Wells' family members were working on Transport Department projects.

Counsel acting for Ms Clarke said she had made a "complete and categorical denial that conversation took place".

"She will come to the commission and give that evidence live," he said.

Mr Wells and Mr Ooi are also due to give evidence at the three-week investigation.

Intercepted phone conversations were played at the hearing, including one in which Barry Wells told Darrel Salter, an employee of Mr Morrissy, to "put a couple of bodgie quotes in tomorrow".

"Yeah yeah, no worries," Mr Salter said.

Michael Delatore also gave evidence on Wednesday, telling the hearing Barry Wells was a domineering presence behind the scenes in the running of the business he and Mr Wells' son owned, giving daily orders of what to do.

Mr Wells and Mr Ooi spent some of the millions in public money they siphoned on home improvements and on luxury goods including a piano and jet skis.

The investigation, dubbed Operation Fitzroy, continues.