Telstra has defended itself against claims its chief executive Sol Trujillo last year showed favouritism in awarding a lucrative deal to a supplier with which he had been associated in previous roles.

Newspaper reports have claimed Trujillo fast-tracked Telstra's procurement process to award the construction of Telstra's planned new AU$3.4 billion fibre network to vendor Alcatel, on whose advisory board the Telstra boss used to sit.

The news comes as the federal government's Senate Estimates committee was told yesterday Telstra staff had last year warned the company's senior executives of a history of disputes with Alcatel over service quality and pricing.

But Telstra government relations general manager David Quilty told the hearing yesterday the telco had delegated certain powers to its chief executive before Trujillo arrived in July last year.

"Telstra's standard procurement rules and policies have not changed under the new management," Quilty said.

"The board has specifically considered Telstra's sourcing processes in the context of the transformation and has been involved in all decisions with respect to transformation activities.

"The CEO and the management team have acted with the approval of the board and complied with Telstra's relevant procurement rules and vendor selection policies at all times."

Quilty said Telstra acted commercially in its procurement processes. "We are making our processes faster and less bureaucratic so they also serve the interests of our customers and shareholders rather than suppliers," he said.

Telstra has moved to a policy of buying fully-integrated systems from a few large suppliers, and signing end-to-end retail supply chain agreements with industry leaders.

"This means that those suppliers carry risk that was previously borne by Telstra," said Quilty. "It means that our customers benefit from economies of scale and scope.

"And it also means that Telstra no longer pays the additional cost of integrating multiple components into a finished product."

Quilty said Alcatel was one of the world's largest and most reputable suppliers because it offered the best solutions in combination with competitive prices, the widest range of products, and the speediest delivery.

ZDNet Australia's Renai LeMay contributed to this report.