£28m spent on ditched asylum centre

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The National Audit Office (NAO) said some of the problems with the plans for an accommodation centre at Bicester, Oxfordshire, could have been foreseen - and money saved - if the department had worked in a "more co-ordinated and joined-up way".

It also gave a rare insight into the wildly varying bids submitted by private firms to win government contracts such as the cancelled asylum centre.

One firm, Global Solutions Limited (GSL), was awarded the contract after undercutting another company, UKDS, by nearly £25 million to build the 750-bed centre, in 2003 prices excluding VAT.

GSL told the Home Office its total construction cost would be £59.9 million, while UKDS bid £84.5 million and a third company, Premier Accommodation Services, bid £69 million.

The winning bidder also said it could operate the centre for £15.4 million a year compared with UKDS's £17.9 million a year figure, the report revealed.

After the project was abandoned, the Home Office handed termination payments to GSL totalling £7.9 million. The company was also paid £7.6 million for design work.

The Bicester project was plagued with problems after the accommodation centre policy was launched by then home secretary David Blunkett in October 2001.

A long-winded effort to win planning permission meant that by April 2005 Home Office officials ruled the project was no longer economically viable.

Capital costs had risen and at the same time asylum applications had fallen for a number of reasons, the NAO found.In all, £33 million was spent on the project to build up to 10 accommodation centres, £28 million of which went on Bicester, the NAO said.