An Auckland jail is to be handed over to private management under legislation passed last year.
The tender process for the handover of the joint Mt Eden-Auckland Central Remand Prison will begin within a month, with a decision early next year. A formal handover is pencilled in for August 2011.
The time period of the contract is open to negotiation.
The privatisation of prisons has been a hot political issue, withLabour and the Greens strongly opposed and Act strongly in favour.
The Government announced last month the decision to contract out the design, building and running of a new prison in Wiri, Manukau City, to be in place by the end of 2014.
Corrections Minister Judith Collins said a privately run prison was an opportunity for innovation and savings, while improving safety.
Responsibility for prisoners would still rest with the Corrections Department, with the same accountability through the Ombudsmen and Prison Monitors.
Labour's corrections spokesman, Clayton Cosgrove, said the party would reverse privatisation of any prisons.
"If Labour were elected government, it would be our intention to revert back to Crown management of prisons.
There is no way there is the same level of accountability or parliamentary inquiry, as they have now with a government agency.
"Corrections is the core responsibility of the state."
Auckland Central Remand Prison was privately run by the Australian GEO Group from 1999 to 2005, when the Labour Government refused to renew the contract.
Ms Collins has praised GEO for introducing new rehabilitation services and having fewer positive drug tests and an excellent safety record - only one suicide and three serious assaults in 2004 - but the Corrections Association has challenged this.
Data shows that it cost $7072 more a year to house prisoners at the remand prison during those years than it did at public jails.
The union has warned that the chief area where money is saved is staff numbers and salaries and has pointed to its members working for about 25 per cent less than their public-servant counterparts while at the prison.
Ms Collins moved to defuse that criticism yesterday, saying the new contractor would be obliged to have sufficient staff and would face fines if the conditions of the contract were not met.
The contract will be open to overseas bidders, including GEO, which has already shown interest in Wiri, but Ms Collins said it was a chance for New Zealand businesses, especially iwi, to take part in an advisory role.
* Late May/June: Request for proposals to short-listed parties.
* August: Responses received.
* Early 2011: Decision on who will manage the site.
* August 2011: Contractor takes possession of site.