Dermot Ahern (Louth, Fianna Fail)

In 2006, the Irish Prison Service launched an EU-wide tender competition for the design, construction, finance and maintenance of a new prison development by means of a value for money public private partnership. The Léargas consortium was appointed as the preferred bidder for the project in April 2007. An environmental impact assessment in respect of the development was published in February 2008 and development consent was granted by the Oireachtas later that year. This development consent requires the construction of an access route and perimeter wall before the construction of the main prison buildings.

The pre-contract negotiations on all aspects of the project, including its legal, technical and financial aspects, culminated in February 2009 when the Léargas consortium was asked to submit its best final offer for the development. Following a detailed evaluation of the offer by the Irish Prison Service and its advisers, including the National Development Finance Agency, the offer was deemed to be not affordable in light of the significant increase in the cost of finance and, particularly, the increase of over 30% in the level of the annual unitary charge which would have been paid to the consortium. The tender quotations for that PPP competition remain commercially sensitive. The Department of Finance guidelines require the quotations to be kept confidential. It is difficult to identify and isolate the costs that arose from the abandonment of the PPP competition. I understand that significant costs fell on the bidders who participated in the competition. The major cost to the State results from the delay in developing a modern prison campus on the site.

The development is proceeding on a phased basis. Phase 1 comprises essential enabling works that are required for the development, including the construction of a dedicated access road, perimeter wall and off-site services. Tenders for the construction of the access road were published in February of this year. Tenders for the construction of the perimeter wall will be published in September. I expect the first contract to be signed and construction work on the access road to start this summer. All of these works are being done by means of traditional procurement methods. Phase 2 will include the development of the main prison campus. A detailed appraisal is under way in accordance with the capital expenditure guidelines of the Department of Finance. The new business case is at an advanced stage of preparation.

As I mentioned last week during the debate on the Estimates, my priority is to ensure that prison cells are made available at Thornton Hall as quickly as possible. A phased opening of a prison complex at Thornton Hall would not be viable under a PPP approach. Therefore, I favour proceeding using traditional procurement mechanisms. I envisage the construction of the main prison campus in a number of stages, possibly three, with each stage being opened as soon as it has been completed along with the necessary ancillary facilities. While this will increase the time schedule for completion of the overall project, it will mean additional capacity could be available up to two years before that envisaged under the PPP process. It is still my intention to have a total of 1,400 cells with a capacity of 2,200 spaces delivered at Thornton Hall, but with earlier delivery of the first blocks and staged delivery of the rest. The design prepared by the preferred bidder for the former PPP competition will not be used.

I will bring this matter before the Government in the next few weeks for approval. I will not be in a position to confirm the details, or outline an indicative timetable for the proposal, until the Government has considered my proposals. As regards costs, it is not the practice to disclose commercially sensitive data in advance of a tender competition. In the light of our current economic circumstances, it is clear that costs have to kept to a minimum. The cost of the new approach will have to be substantially less than the final cost envisaged by the preferred bidder in the PPP competition.

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