O’Rourke beat rival bidders Carillion, Skanska and Morgan Sindall to the scheme where work starts on the £30m design and build contract at the maximum security prison in May.

This will include a 270-cell block and prisoner activities wing. Justice Secretary Kenny MacAskill said: “We are committed to bringing the prison estate up to 21st century standards.

“This latest development is further evidence of that commitment and our record investment in Scotland’s prison estate.

He added: “This contract at Shotts follows the investment that has improved the fabric of Glenochil, Edinburgh, Polmont, and Perth prisons – and it follows the announcement of new publicly-built and publicly-run prisons at Low Moss and Grampian, despite the most severe public spending cuts in a generation imposed on Scotland by Westminster.”

John Ewing, Chief Executive of SPS added:  “The SPS is making substantial progress in creating a fit-for-purpose prison estate which will support our aim of reducing the risk of prisoners reoffending on release from prison.

Carillion is building the first phase of modernising HMP Shotts, which will be completed this Spring. HMP Low Moss and HMP Shotts Phase 2 will open in 2012.

These developments will provide some 1,200 modern places.

Planning permission is being sought for HMP Grampian, which will replace HMP Aberdeen and HMP Peterhead, and a site has been identified for HMP Inverclyde which will replace HMP Greenock.

SPS is designing these facilities to deliver operational efficiencies with reduced carbon emissions.