On September 20th 2024, leading construction supplier, ISG, fell into administration. 2,200 workers were made immediately redundant and over £1b of public sector contracts are now left in limbo.
This article uses Tussell data to analyse ISG's public sector footprint - and what will happen to their current government contracts.
* * *
Until recently, ISG was one of the largest construction suppliers to the UK public sector.
Analysis from Tussell reveals that the mammoth construction firm billed the government £237m in FY 23/24 alone.
Source: Tussell
ISG saw their public sector revenue increase by 46% between FY 18/19 and FY 23/24.
Despite this, ISG's public sector revenue fell consecutively for two years prior the firm filing for administration in September 2024.
-1.png?width=815&height=200&name=TUSSELL_Demo_CTA_Banners%20(4)-1.png)
Between FY 18/19 - FY 23/24, ISG billed Central Government and Local Government contracting authorities £781m and £434m respectively. Their footprint in the NHS was significantly smaller.
Over the past few years, the MOJ consistently remained ISG's largest public sector customer by direct revenue.
HM Prisons and Probation Services (HMPPS) - an MOJ Arms Length Body -represented almost 26% (£328m) of ISG's public sector revenue from FY 18/19 - FY 23/24.
Source: Tussell
At the time of the collapse, ISG held 23 live contracts with the public sector worth an estimated cumulative value of £1.16b.
11 of these contracts were awarded via framework agreement or DPS - 4 of which were awarded under the CCS's RM6088 framework.
.png?width=815&height=200&name=TUSSELL_Demo_CTA_Banners%20(12).png)
ISG's list of live contracts included a £1.2b joint contract with the MOJ for the construction of 4 new prisons.
They also held another large £43.5m contract with the MOJ - of which ISG was the sole supplier - for prison improvement works.
What happens next?
Now that ISG has collapsed, work on these public sector contracts may pause.
According to Legal Director Chloe Poskitt, "contracts do not automatically terminate upon entry into administration."
"The administrators may, after weighing up the interests of the company against those of the creditors, decide not to perform the contract."
This would present an opportunity for other construction suppliers to continue ISG's work - to learn more about ISG's ongoing contracts, get in touch.
According to Building.co.uk, the financial blackhole ISG was facing at the time of collapse totalled over £500m.
Much of that cost will be passed on to smaller subcontractors - including a host of SMEs - many of which are worried that they might not be paid. Final accounts published by ISG indicate it owed over £700mn to its supply chain.
In an interview with the BBC, Paul Margen - who runs a small family construction business - spoke to the knock on effect ISG's collapse will likely have on the industry at large.
Paul says his firm will survives, but says there is "no doubt a lot of companies will go under".
* * *
ISG's collapse has major repercussions for the construction sector.
We were able to analyse ISG's public sector footprint using Tussell's market intelligence platform.
The Tussell platform is harnessed by many leading suppliers to government - including several top construction & engineering firms - to understand the UK public sector marketplace.
Book a demo with the Tussell team to discover how you can use Tussell to analyse your competitors, discover new opportunities and find the right frameworks for your business.
