COSTS INCURRED BY the State’s cancellation of pre-contract agreements with potential providers of international protection accommodation represent a “substantial loss to taxpayers”, a report into the State’s accounts said.

The Comptroller and Auditor General (C&AG) today published his report on the public services for 2025. 

Settlements agreed with three potential providers with whom agreements were cancelled formed a “material but undisclosed part” of €35 million accrued in expenses from the Department of Justice last year, the report said.

What are pre-contract agreements?

The C&AG report notes the background in which these agreements were cultivated and cancelled.

Given a significant increase in international protection applicants after the pandemic, there were more people seeking state-provided accommodation while their applications were being reviewed.

The International Protection Accommodation Service (Ipas) procured a large amount of accommodation for its use from private service providers, such as commercial hotels and guesthouses, on an emergency basis. 

A strategy agreed by the government in March 2024 aimed to reduce the State’s reliance on commercial providers by increasing its own bed capacity. It sought out properties that had 150 beds or more, in buildings that could quickly be converted to Ipas accommodation.

Pre-contract agreements with potential providers for 15 properties were entered into by the State. These agreements were signed in 2024 and early 2025.

“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 stated.

The signing represented “commitments to significant future expenditure if the accommodation providers fulfilled the obligations specified in the agreements”.

The Department said that before the introduction of these agreements, potential providers were finding it increasingly difficult to access credit to provide for the refurbishments and work required on the properties from credit institutions and lenders.

The Department of Justice stated that the Department of Public Expenditure was not consulted before entering the pre-contract agreements.

Why were the agreements cancelled? 

In May 2025, the Department of Justice took up the brief to oversee the provision of international protection, a brief previously held by the Department of Children.

As it was preparing to take up the role from the Department of Children, the Justice Department began policy considerations for the addition to its brief. 

A key policy objective was to “curtail further growth in the size of the international protection property portfolio and to reduce it over time”.

It decided to proceed with one of the lease agreements provided for under the pre-contract agreements. Three agreements lapsed when proposals were withdrawn, or deemed to have lapsed.

In mid-2025, the Department decided to cancel the remaining agreements. The potential providers were notified of the decision.

Legal action

High Court proceedings were then brought against the justice minister in 2025 and 2026 by five potential providers whose agreements were cancelled.

The Department said that the potential combined value of the related agreements was more than €100 million, according to the C&AG report.

After mediation, settlement payments were made in three of the legal cases. Legal costs for these cases remain outstanding for agreement and payment.

The settlement amounts are significantly less than the estimated contract values, the C&AG said.

Settlement was not reached through mediation in the other two cases and the Department expects that those cases will proceed to hearing by the Commercial Court in due course.

The Department’s view is that costs incurred could only have been avoided if it had “proceeded with greater expenditure for services that the Department did not want or need”, the report said.

In his conclusions, the C&AG said: “The expenditure related to the termination of the pre-contract agreements represent payments for which no value has been obtained and represents a substantial loss to taxpayers.”

The practice of pre-contract agreements has now been discontinued.

The chair of the Public Accounts Committee, Sinn Féin TD John Brady, said the committee will “closely scrutinise” the “significant weaknesses in the management and use of public funds” identified in the report.

“One area of particular concern is the management of contracts relating to international protection accommodation,” Brady said.

“While we need a fair and effective system, it must also operate in accordance with proper procurement procedures and robust financial controls. 

He said the “full financial exposure” of the costs incurred by the State remains unclear, and PAC will seek “absolute clarity” on this.

At the end of December 2025, there were 32,689 international protection applicants availing of State-provided accommodation, resident in 324 accommodation centres.

Of these, 77% were resident in 269 emergency accommodation centres provided by commercial operators.

The cost of providing international protection accommodation amounted to €1.36 billion in 2025.