Contractor ISG held at least £1.84bn in government contracts before its collapse, causing a headache for the prison-building programme, Construction News can reveal.
The UK’s sixth-biggest contractor will soon go into administration, its chief executive confirmed last night in an email to staff and suppliers, after CN revealed six subsidiaries had already lodged administration applications.
Freedom of Information requests submitted by CN show the bulk of ISG’s government work came from the Ministry of Justice (MoJ), with which it held £1.65bn in contracts as of 26 June, a week before chair Matt Roche told staff and suppliers the firm was “very near” to being sold.
A government spokesperson said: “We have implemented our detailed contingency plans and affected departments are working to ensure sites are safe and secure.”
ISG was appointed to several high-value prison jobs. The MoJ continued to award the firm prison work – including the £300m HMP Grendon in January – even as rumours swirled about the state of its finances.
ISG was also one of four partners on the MoJ’s pioneering £1bn prison-building “alliance”, working alongside Kier, Laing O’Rourke and Wates to build four male prisons.
CN understands that the government is already looking at the possibility of asking one of the other contractors on the alliance to step in to pick up ISG’s work.
CN also previously revealed the MoJ paid out £145.9m to ISG – its second-largest supplier – in the latest financial year.
An MoJ spokesperson said: “We have robust contingency plans in place to mitigate the impact on our prison and court estate of ISG going into administration.
“We will work with administrators and will find alternative ways to deliver these projects where necessary.”
The Department for Education (DfE) had £190.5m in ongoing contracts with the firm, as of June.
ISG picked up several multimillion pound school building projects after being awarded eight regional lots on a four-year £7bn DfE framework in 2022.
Of the £190.5m, more than half – £101.3m – related to projects in the main construction phase. Around £80.5m worth of projects were in the defects liability period and £8.7m in the preconstruction phase.
CN understands the DfE is working with affected schools to find alternative ways to deliver projects, and will pursue “all forms of redress” to minimise additional costs.
The Department for Health and Social Care, Defence Infrastructure Organisation and the Welsh Government told CN they had no ongoing contracts with ISG.
Earlier today, CN reported that a war of words over the collapsed deal to sell ISG had broken out between the contractor and the firm that had been negotiating to buy it.
