The Minister for Transport Mr Cullen said tonight he was "very disappointed" at the decision of an arbitration committee that prohibits the use of a private company to cut the waiting list for the driving tests.
Speaking from the US where he is attending a number of St Patrick's Day functions, Mr Cullen said the "Government has no intention of giving up on this. We must and will find a solution. It is too important, both from a road safety perspective and from the perspective of the efficient provision of a key public service, not to do so."
Mr Cullen had planned to outsource some 40,000 driving tests to a private company and had even identified a preferred candidate, the company that carries out the NCT, to run the tests.
However the plan was strongly opposed by the unions representing driver testers and administration on the basis that driving tests were core civil service work and could not be outsourced to a private company.
The dispute was adjudicated on by the civil service arbitration board which ruled this morning that driving tests cannot be outsourced.
Mr Cullen said: "The temporary outsourcing of a set number of tests for a set period of time was one part of our proposals to help the 137,000 people waiting to sit their driving test and over 260,000 more people with provisional licences yet to apply to do their test.
"Being unable to introduce temporary outsourcing means that an additional measure, that included access to the most modern infrastructure and scheduling systems, is now not available to those waiting to do their test. Such a modern system, its immediate availability and immediate benefit has serious merit."
The ruling is a severe setback to Mr Cullen who had pinned his hopes on outsourcing as a way of reducing the stubbornly long waiting list.
The civil service arbitration board ruling is binding on both parties and also has wider implications. It sets as a precedent that core civil service work cannot be outsourced even for a short or fixed period of time.
Impact has called on the Department of Transport to implement proposals that were stalled pending the arbitration hearing to deal with the driving test waiting list.
The Civil Service Arbitration board is chaired by Gerry Durkan senior counsel, and includes nominees Tom Wall and Derek Hunter.