The State paid out “substantial” sums in legal settlements to the providers of accommodation for asylum seekers after it cancelled precontract agreements, the State spending watchdog has said.
A report from the Comptroller and Auditor General published on Wednesday said “no value” had been secured from the money paid out, which represented “a substantial loss to taxpayers”.
The report says precontract agreements entered into by the Department of Children in 2024 and early 2025 – with a combined value of more than €100 million – represented commitments to significant future expenditure.
It said such deals “therefore represented significant contingent liabilities for the Exchequer”, which should have required the approval of the Minister for Public Expenditure.
RM Block
The watchdog said the Department of Public Expenditure was not consulted before entering the precontract agreements and no contingent liability in respect of these arrangements had been disclosed by the Department of Integration in its accounts for 2024.
Details of the settlements were not included in the watchdog’s report, but were described as “substantial”.
The report said in March 2024, the Government approved an accommodation strategy aiming at reducing the State’s reliance on commercial providers for accommodation for those seeking international protection by 2028.
It said the Department of Children launched an “expression of interest” process to source suitable properties. More than 134 submissions were received but no contracts were entered into.
It said precontract agreements were entered into with potential accommodation providers in respect of 15 properties, and these “did not emerge from the expression of interest process”.
[ More than 1,100 asylum seekers have voluntarily left the State this yearOpens in new window ]
The Department of Justice, which now has responsibility in this area, told the watchdog that precontract agreements were first used by the International Protection Procurement Service in May 2024.
“The purpose of introducing such agreements was to provide security for potential providers of temporary emergency accommodation for their investments in larger-scale accommodation centres.”
The report said potential accommodation providers had maintained they were finding it increasingly difficult to access the credit necessary to refurbish large properties.
After taking over responsibility from the Department of Children in mid-2025, the Department of Justice proceeded with one of the precontract agreements, while three others were considered to have lapsed.
The department then decided to terminate the remaining agreements. Five accommodation providers who had signed precontract agreements subsequently sued the Minister for Justice.
“The department has stated that the potential combined value of the related agreements was more than €100 million. Following mediation, the Department of Justice made settlement payments in three of the legal cases.
“Plaintiff costs in those cases remain outstanding for agreement and payment. The settlement amounts are significantly less than the estimated contract values. Settlement was not reached through mediation in the other two cases.
“The Department of Justice expects that those cases will proceed to hearing by the Commercial Court in due course.”
The watchdog said the Department of Justice “expressed concern” that publication of details relating to the settlement payments or to the department’s response to claims could “hamper the State in the legal proceedings”.
“The Department of Justice’s view is that costs incurred could only have been avoided if the department had proceeded with greater expenditure for services that the department did not want or need,” the report said.
The Department of Justice told the watchdog the use of such precontract agreements “is now entirely discontinued” in favour of long-term plans for State accommodation and an “overhaul of commercial contracts”.
