The State spending watchdog has criticised the handling of precontract agreements for asylum seeker accommodation, saying settlements paid after their cancellation secured no value and represented a substantial loss to taxpayers. The arrangements, made by the Department of Children in 2024 and early 2025, had a combined potential value of more than €100 million and created significant contingent liabilities for the Exchequer.
Agreements created liabilities before contracts existed
The Comptroller and Auditor General’s report concerns precontract agreements, a mechanism used to give potential suppliers security before a full service contract is concluded. In this case, the Department of Children entered agreements with potential accommodation providers for 15 properties. The report says the agreements represented commitments to significant future expenditure and therefore significant contingent liabilities for the Exchequer. That status mattered because approval from the Minister for Public Expenditure should have been required. The Department of Public Expenditure was not consulted, and the Department of Integration did not disclose any contingent liability relating to the arrangements in its 2024 accounts.
The properties did not come from the initial process
The arrangements followed a Government-approved accommodation strategy aimed at reducing reliance on commercial providers by 2028. The Department of Children launched an expression of interest process to source suitable properties, receiving more than 134 submissions. No contracts were entered into through that process. The watchdog says the 15 properties covered by precontract agreements did not emerge from the expression of interest process. The Department of Justice told the report that the International Protection Procurement Service first used the agreements in May 2024, to provide security for potential providers investing in larger-scale temporary emergency accommodation centres.
Three cases settled while two remain before the courts
After the Department of Justice took responsibility for the area in mid-2025, it proceeded with one precontract agreement and considered three others to have lapsed. It then decided to terminate the remaining agreements. Five accommodation providers sued the Minister for Justice. Following mediation, the department made settlement payments in three cases, although plaintiff costs remained outstanding for agreement and payment. The report says the settlements were significantly less than the estimated contract values. Mediation did not resolve the other two cases, which the department expects to proceed to hearing by the Commercial Court. The settlement details were not published.
The procurement approach has now been discontinued
The watchdog said no value had been secured from the money paid out in settlements, describing the payments as a substantial loss to taxpayers. The Department of Justice expressed concern that publishing settlement details or its response to claims could hamper the ongoing legal proceedings. It also told the watchdog that the costs could only have been avoided by proceeding with greater expenditure on services the department did not want or need. The department said the use of precontract agreements is now entirely discontinued. It is instead relying on long-term plans for State accommodation and an overhaul of commercial contracts, a shift that separates early market engagement from commitments to future spending.
| Fact | Detail |
|---|---|
| Potential combined value | More than €100 million |
| Properties covered | 15 |
| Submissions to expression of interest process | More than 134 |
| Precontract agreements first used | May 2024 |
| Providers who sued | Five |
| Cases settled after mediation | Three |
| Cases expected to proceed to hearing | Two |
The watchdog said no value had been secured from the money paid out, which represented a substantial loss to taxpayers.
WHY IT MATTERS
A precontract agreement can support supplier investment before a full contract exists, but it can also create a contingent liability for the state. The report underlines the need to identify such commitments, obtain the required approval and disclose them properly before public money is exposed.
Reported from irishtimes.com, 2026-09-30. The Tender Wire is published by Otnox.
