The Ministry of Justice has opened up negotiations with Laing O’Rourke about carrying out failed contractor ISG’s new build prison scheme in Buckinghamshire, Building understands.

Along with Kier, Laing O’Rourke and Wates, ISG was one of four firms appointed to the New Prisons Programme – which the Ministry of Justice (MoJ) refers to as the Alliance – that is intended to create 6,000 new places.

But ISG’s collapse into administration last month has meant that its appointment to build a 1,500 space category C “resettlement” jail near Aylesbury, next to the existing category B Grendon and category D Springhill prisons, will need to be to be carried out by another contractor.

The new prison will be built next to the existing Springhill and Grendon prisons

Building understands the MoJ has begun talks with Laing O’Rourke about picking up the work – although negotiations are in their early days with conversations having only started in the past week or so.

An MoJ spokesperson said: “We have robust contingency plans in place following ISG’s administration and are in advanced discussions with the Alliance to ensure the delivery of new prison places.

“As part of our long-term strategy to increase prison capacity, we are working hard to ensure these projects are completed as quickly as possible to ease pressure on the prison estate.”

Laing O’Rourke declined to comment.

Kier, which built HMP Five Wells at Wellingborough, has been building HMP Millsike near York, which is due to open next year, while Wates will build a new category B at HMP Gartree in Leicestershire for £300m.

Laing O’Rourke is also set to build a 1,700 space prison at Chorley in Lancashire, which has been held up by as series of planning wrangles.

ISG’s implosion has stalled some other smaller prison projects but the MoJ has been working to bring in alternatives and has been speaking to administrator EY about mitigating delays to jobs.

The MoJ is due to publish a 10-year prison capacity strategy before the end of the year, outlining steps to increase accommodation and reduce pressure on the prison estate.