Quality issues with new prison units

Corrections staff have identified a number of issues relating to the manufacture of its rapid-build modular units for prisoner accommodation during quality assurance trips to China.

Between February and September, officials made six trips to the manufacturing site, at a total cost of $71,079. The trips related to supply chain inspections, due diligence and quality assurance throughout the manufacture and dispatch process.

Corrections says quality issues identified during the trips were “typical of the types of issues that occur in large-scale construction work of this nature” and had since been addressed.

Corrections chief custodial officer Neil Beales said quality issues identified included design changes, standardised work quality across the units and other matters relating to finishing.

The company tasked with delivering the units – Australian company Decmil – recently encountered quality issues with the Manus Island refugee processing and detention centre it delivered to Papua New Guinea for the Australian government.

Decmil has also carried out work for New Zealand’s Ministry of Education and the defence force.

In Budget 2018, Corrections Minister Kelvin Davis announced Corrections would receive five modular units, providing an additional 610 beds for prisoners by December 2019.

In total, the modular units will provide 976 additional prison beds, at a total cost of $406.1 million.

Decmil was awarded the job through the open tender process under the previous government and extended by the current Government to deal with projections that showed the prison population was expected to continue to grow at a rapid pace.

Beales said Corrections still expected to receive the units by the end of next year.

Some of the finishing work would have to be completed in New Zealand. And the units would be inspected once they were in the country. Any other issues would be sorted at this time.

Meanwhile, Corrections had also hired a quality assurance company to monitor the overseas manufacturing, and independently test the steel used in the units.

Extensive due diligence had also been undertaken on the suppliers of components, Beales said.

“We have been actively involved with the supplier throughout the design process and have conducted regular site visits to view the factory, the conditions and the quality of the product.”

The units were manufactured from components that met New Zealand building code standards. They were fitted out to Corrections’ specifications, using approved products including custodial-grade steel doors and windows.

A spokesman for Decmil in New Zealand said the company could not make any comment relating to the contract with Corrections due to a confidentiality agreement within the contract.

Urgent need for beds

In November 2017, the Department of Corrections wrote to Davis asking for operating funding for 422 additional places and increased muster capacity, above what was funded in Budget 2017. Corrections also asked for capital and operational funding for the rapid building of an additional 600 places, needed between then and 2019.

The document, released to Newsroom under the Official Information Act, said 1742 places were needed by 2021 to cover the expected rise in the prison population.

An aide-memoire from the following month from the Ministry of Justice said “assuming the 422 and 600 places requested by the Minister of Corrections in his papers are approved, under current projections it is estimated that the Department of Corrections faces a further shortfall of just under 700 prisoner places in 2020/2021”.

This shortfall was over the Waikeria rebuild, as the new facility was not expected to come online until later in 2021.

Since the prison population peaked at 10,820 in March, it had experienced a noticeable drop. Earlier this month, it dropped below 10,000 for the first time in two years – a reduction of more than 7 percent in six months.

Davis said the Government inherited a prison network under pressure, with a prison population that had grown by almost 20 percent in the last five years.

Since then, it had worked on making the system more effective, and efficient.

“While we are now defying the forecasts and have eased immediate pressures, we still need to ensure there is sufficient fit-for-purpose capacity across the prison network in the short, medium and long term,” he said, adding that the modular units were an effective way of rapidly increasing capacity.

“This is about prioritising public safety, and safely and securely accommodating prisoners in a cost and time efficient way.”

Population still expected to rise

National Party corrections spokesman David Bennett said improving system efficiencies could only do so much.

The Government had set a target to reduce the prison population by 30 percent in 15 years, something Bennett said could only be done with legislative reform.

While the population may have dropped a bit, continuing with the rapid build modular units showed Davis believed the forecasts were correct, and the extra accommodation was needed.

While no one wanted more New Zealanders going to prison, it was important to fix the drivers of crime and societal issues, rather than start with a target and work backwards, he said.

Problems on Manus

Decmil’s biggest corrections contract in Australia was the construction and expansion of the Manus Island offshore refugee detention and processing centre.

The two separate contracts were worth AU$147m ($161m) and AU$137 ($150m). However, AAP reported Decmil wore AU$25m ($27.4m) in losses because the modular buildings had to be gutted and rebuilt.

At the time, a Decmil company spokesman told AAP the quality issues with the Manus buildings related to commercial matters and engineering disagreements. This led to a dispute between Decmil and sister companies Ark Modualr and Ark China – which were contracted to manufacture the units.

"The dispute has arisen due to the deficiencies in the material supplied and work performed by Ark Modular," according to the Decmil 2015 annual report.

In 2015, it emerged three staffers from Decmil and a department official went on a $48,000 four-day junket to China which included first class airfares, a $400 bottle of scotch and female escorts. The trip was to inspect Ark China's factory. Ark China said it paid for the trip.

Other Government contracts

Decmil has won a range of construction contracts across the education, corrections and now defence sectors in New Zealand.

The company is about to begin construction on two schools on Auckland’s Waiheke island - Te Huruhi School and Waiheke High School. The contract is worth $24.3m.

The Government expected to spend just over $40m in total, including $23m to build 22 new flexible learning spaces, a new library and administration area and a hall upgrade at Te Huruhi School, and $17m for rebuild works at Waiheke High School. Decmil was the main contractor, with other companies carrying out sewerage and water infrastructure works.

Kim Shannon, the Ministry of Education's head of education infrastructure service, said the ministry had robust procurement and monitoring systems in place and any issues were managed as they arose, adding that Decmil had successfully delivered a number of projects around the country on behalf of the ministry.

These projects included the design and construction of South Hornby School in Christchurch, as part of the schools rebuild. The project was completed in August last year. The company was also awarded a design and construction contract for a Takanini school.

Shannon said construction of the two Waiheke schools was due to start during the summer break, with both expected to be completed mid-2020.

Meanwhile, Decmil delivered its first New Zealand Defence Force contract in August last year. According to Government tender information, the contract for the construction of a new ammunition processing building at Kauri Point in the Auckland suburb of Birkenhead was worth about $650,000. A spokesman for the Defence Minister said the job came in under budget without any issues.

Newsroom is powered by the generosity of readers like you, who support our mission to produce fearless, independent and provocative journalism.

Become a Supporter


Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.