The Government has been urged by the Inspector of Prisons and Places of Detention, Mr Justice Dermot Kinlen, to privatise one of the State's prisons in an effort to determine how the privatised model would work within the Irish prison system.
The controversial proposal is contained in Mr Kinlen's annual report for 2004 which has not yet been published.
The recommendation comes at a time when the Prison Officers' Association (POA) remains embroiled in a long-running dispute with the Department of Justice and the Irish Prison Service.
The dispute centres on proposals for a system of annualised overtime hours which the department wants to introduce in an effort to reduce by €30 million the prison service's €65 million annual overtime bill.
The POA has already claimed Mr McDowell was using the two-year dispute on overtime as a mechanism to privatise the prison system.
The process of privatising the prison escort system, which accounts for around 25 per cent of all overtime expenditure, has already begun, with expressions of interest sought from would-be service-providers.
The Department of Justice is also seeking expressions of interest from private firms which might be interested in running two of the prison service's open jails, namely Loughan House, Co Cavan, and Shelton Abbey, Co Wicklow.
Mr McDowell wants to take these outside the remit of the prison service by transforming them into privately run pre-release facilities, or halfway houses.
He has insisted that he will go ahead with these plans and that Spike Island prison, Co Cork, and the Curragh, Co Kildare, will remain closed until the prison officers agree to an improved salary offer in exchange for working an average of seven hours extra per week.
The Irish Times understands that officials within the department believe that, if even one secure prison was successfully privatised, the POA's position as a trade union would be greatly undermined in the long term.
If no agreement could be reached on annualised hours, the Government might opt to roll out the privatised model to include more than the initial trial prison suggested in Mr Kinlen's report.
Mr McDowell has already indicated that the tender to construct the new Mountjoy prison in north Co Dublin may be offered on a "construct and operate" basis.
The officers have already rejected an offer which would have given them a basic salary of between €48,000 and €70,000, depending on seniority.
The offer included a once-off payment of almost €14,000.
It was defeated by a majority of two to one in a ballot earlier this year despite the POA executive recommending to its members that they accept it.
Many officers who work no overtime at present rejected the offer because it would have obliged them to work an average of seven hours of overtime per week. At its annual conference in April, POA delegates voted on a compromise deal.
They want some officers to be allowed work no overtime and for their hours to be redistributed to officers who want to work more hours.
The Minister, Mr McDowell, is considering the compromise proposals.
