New tendering rules for asylum firms

Some companies involved in direct provision make millions of euro in profits

Asylum seekers, refugees and supporters  march to the Deptartment of Justice  protesting about the system of direct provision. Photograph: Alan Betson

Asylum seekers, refugees and supporters march to the Deptartment of Justice protesting about the system of direct provision. Photograph: Alan Betson

 

The State agency responsible for accommodating asylum seekers has promised to introduce a more open and competitive tendering process as new figures show some private firms involved are making millions in profits.

Companies receive about €50 million in public funds each year to provide bed and board for more than 4,000 asylum seekers at 34 direct provision centres across the State.

However, an Irish Times analysis of company records shows many firms are highly profitable and in some cases have accumulated millions of euro in profits. Currently, the Reception and Integration Agency (RIA) negotiates prices with existing contractors instead of using an open and competitive tendering process. Many commercial contracts are typically based on the bed capacity of a centre rather than its occupancy levels. This means the State may be paying for empty beds.

Contract details

However, a value for money report in 2010 expressed some concern that not enough firms were competing for business. For example, it found that of 44 contracts with private companies in place, 41 had been renewed. Many of these contracts – with an average length of 2½ years – had been renewed four or five times.

In a statement, the RIA said it was drawing up a more open tendering process for commercial contracts instead of the “negotiated procedure”. It said progress had been stalled because of a legal challenge to direct provision and a Government working group which was reviewing the wider system.

Any new commercial contract would need to recognise that the accommodation system “fundamentally concerns human beings who see their current accommodation as their home with links to local schools and medical and social services”, it said.

EU directive

Company records indicate that many private firms have accumulated significant profits.

For example, records show that Fazyard Ltd, a company owned by Co Wicklow businessman Seán Lyons and which is linked to three asylum centres, had accumulated profits of €10.8 million, according to company records. Many other firms appear loss-making, but are often paying profit out of their companies to directors or to other linked companies.

In all, companies with published accounts recorded accumulated profits of about €25 million. This may be a significant underestimate as some of the biggest firms have taken elaborate steps to shield their accounts from public scrutiny.

The details have emerged as tensions continue to surface in some centres over issues such as living conditions and length of stay in institutional settings designed to be short term. The RIA said it was a condition of all contracts that a Revenue Commissioners’ tax clearance certificate is provided annually.