Canstruct loses lucrative Nauru offshore processing contract

Australia offshore processing centre
Australia's offshore processing centre in Nauru (Photo: MSF)

Canstruct has lost the lucrative contract to run Australia’s offshore immigration regime on Nauru with the Brisbane firm to be replaced by a U.S.-headquartered private prisons operator that has a controversial past.

Sources have told the Guardian that Canstruct’s current contract, set to end on September 30, will not be renewed and from October 1, “facilities, garrison, transferee arrivals and reception services” will be run by Management and Training Corporation (MTC) Australia.

Canstruct’s rolling contracts over five years – worth a total of $1.82bn (US$1.2 billion) – have been the subject of intense scrutiny for the high cost of running offshore processing despite a diminishing number of detainees.

No new asylum seeker arrivals have been sent to Nauru since 2014 but the cost of running the regime has remained between $35m (US$24 million) and $40m (US$28 million) a month. The number of asylum seekers and refugees held on Nauru has fallen from more than 1,000 to about 100.

According to official government figures, the cost to hold a single refugee on Nauru in 2021 was more than $4.3m (US$3 million) annually.

Canstruct’s original 2017 contract worth $385m (US$270 million) was amended eight times without competitive tender and eventually totalled $1.82bn (US$1.2 billion).

Canstruct declined to comment citing contract confidentiality restrictions. The Guardian understands the company did tender to extend its contract but was not selected.

The company nominated as the “preferred tenderer” to take over – MTC Australia – is the Australian arm of the private prisons company. No contract has yet been signed.

But the company has a controversial record. Three correctional officers were charged over the alleged assault of a detainee at Parklea in July. The three officers are due to face court later this month.

In the U.S, MTC faces an ongoing lawsuit over the detention of a U.S citizen held in near-solitary confinement for 14 months. The complaint alleges “solitary confinement is a form of torture” and notes the United Nations prohibits prolonged solitary confinement which can constitute torture.

The lawsuit, filed in California, alleges that MTC was a company that “traffics in human captivity for profit”. The case remains active before the court. MTC did not respond to questions about the case.

The Australian arm of MTC is wholly owned by two subsidiaries in Utah, where the company is headquartered.

A spokesperson for the Department of Home Affairs said there would be “no degradation of services” provided to asylum seekers and refugees on Nauru who would “continue to receive health, welfare and accommodation support”.

“Regional processing in Nauru continues to stand ready to receive new unauthorised maritime arrivals.”

In March this year, Australia accepted New Zealand’s longstanding offer to resettle refugees from Nauru in New Zealand. Those transfers have not yet started.

Nauru and Australia have signed a memorandum of understanding, committing to an “enduring form of offshore processing” on the Pacific island state. Australia’s other offshore detention centre, on Papua New Guinea’s Manus Island, was illegal and ordered shut by PNG’s supreme court.

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