What ISG Ltd’s Failure Tells Us About Public Sector Contracts

When ISG Ltd, one of the UK’s biggest construction companies, went into administration in September 2024, it didn’t just make headlines – it sent shockwaves through the building industry. Over 2,200 workers lost their jobs overnight, and over £1 billion worth of government building projects were suddenly left hanging in the balance.

This collapse didn’t come out of nowhere. And now, many people are asking how it happened, and what it means for other businesses working on public contracts. 



ISG Ltd wasn’t a small player. It was one of the biggest firms that built schools, prisons, and public buildings for the government. In just one year (2023/24), it earned £237 million from public sector work. Over the past six years, it has brought in more than £1.2 billion from government contracts. 

Its biggest client was the Ministry of Justice (MoJ), responsible for prisons and courts. One of ISG’s largest jobs was a £1.2 billion project to build four new prisons. So when ISG Ltd’s failure happened, the impact was immediate and widespread.

One of the main issues this situation highlights is that the government relies too heavily on a few big companies to handle important projects. When just one of those companies collapses, like ISG or Carillion before it in 2018, it puts a vast number of jobs, businesses and services at risk. 

There were warning signs. ISG had been losing money for two years before going under. Still, it was awarded new government contracts, which shows a major weakness in the way the government checks the financial health of companies it hires.

Many people assume that government contracts are automatically cancelled when a company goes into administration. That’s not true. The administrators, who are brought in to try and sort out the company’s finances, decide if it’s worth continuing the contracts.


In the meantime, projects like prison construction and school refurbishments can be put on hold. Some may be passed to other building firms. The Ministry of Justice says it has ‘contingency plans’ in place, but experience shows that delays and extra costs are likely. 


ISG Ltd’s Administration in the United Kingdom

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