The Health Service Executive asked Merchants Quay Ireland to reduce the cost of a new drug injection centre by 32%, according to documents released under the Freedom of Information Act.
Negotiations over costs helped to delay the announcement of the location for the country's first supervised drug injection centre, which was finally made last February.
In the end, a total of €2.8m was agreed for setup and running costs over an 18-month period.
But this does not include the cost of medicines after the HSE decided to supply these directly reducing the total amount by €200,000.
The documents show that a rival tender from the Ana Liffey Drug Project was ruled ineligible because its costings did not meet a minimum standard.
There were also "serious concerns" about the accessibility and suitability of Ana Liffey's premises on Middle Abbey Street in Dublin city.
In particular, the report stated that Ana Liffey had failed to show how it would deal with congregation at the entrance given the limited waiting area.
It found the Merchants Quay building more suitable, consisting of a basement area with three separate rooms for reception, injection booths and a "chill-out area".
The evaluation report by the Health Business Services also noted that there were "some concerns" about the south city location of Merchants Quay as it could lead to a further concentration of services.
But the report said it was estimated that only 60 individuals would be using the injection facility initially and Merchants Quay Ireland was already dealing with 6,500 individuals.
The records show that the HSE's own National Drug Treatment Centre was not judged to be able to run the facility leaving Merchants Quay Ireland as the only eligible tender.
HSE officials said during a meeting in January that it could not award the tender on the costs proposed by Merchants Quay Ireland and highlighted concerns over the cost of a GP, nursing, security and project workers, as well as the cost of medicines.
Merchants Quay Ireland countered that its costings, which were redacted in the documents, were based on similar services in Copenhagen and other countries, and advised the board not to under-cost the tender as it could impact on services.
It said staff costs were based on current rates and pointed out that the necessity for "split shifts" would be a challenge.
In the end, €2.8m was agreed with medicines to be provided by the HSE.
The facility will run on a pilot basis for 18 months with an opportunity for a review after six months.
It will consist of six injection booths open in the morning from 6am to 10am, then from 2.30pm to 5.30pm and again in the evening from 7pm to 9pm with reduced hours on weekends.
The new facility has to apply for planning permission and is expected to be the subject of an appeal to An Bord Pleanála but could be in operation by September.