Serco was named as the preferred bidder to provide and operate two new prisons at Belmarsh West, London and Maghull, Liverpool last year.
Skanska is also on board for the Maghull job, which will be signed later this year. The prison jobs are understood to have a combined cost of £150m.
Both deals have escaped Justice secretary Ken Clarke’s cuts to the £4bn prison building programme outlined in a policy shift to reduce the overall prison population last week.
Five prisons were widely reported to be for the chop, although a highly placed source told the Enquirer: “The word is that two of the five prisons will get the go-ahead because overcrowding is such a problem. But with even deeper cuts being sought it is anybody’s guess”
The uncertainty leaves Balfour Beatty, Bouygues, Carillion, Interserve, Laing O’Rourke and Wates on tenterhooks as they await a formal announcement.
Serco will operate Belmarsh West, a local prison, under a design, construct, manage and finance contract.
The prison, which will be built to Category B standards by Serco’s construction partner Skanska, will accommodate 900 adult male prisoners.
Construction works begin immediately, with completion expected in the first half of 2012.