The government has reportedly appointed advisers to monitor the health of important outsourcers such as engineering company Kier.
The Sunday Telegraph reported that the Cabinet Office has hired accountancy firm Deloitte to assist in assessing the finances of key contractors.
The move follows the collapse of outsourcer Carillion in 2018.
The Cabinet Office, which employs Crown Representatives to manage relationships with major public sector suppliers, was criticised for a lack of oversight of Carillion before its failure.
It is understood the Cabinet Office is looking at corporate resolution plans and living wills for its key strategic suppliers in case they get into financial difficulties.
Closer supervision of important public sector suppliers comes as the government gears up for billions of pounds of spending on infrastructure.
Kier is set to benefit from the government’s decision to push ahead with the High Speed 2 railway project with a series of lucrative contracts.
However, the Sunday Telegraph reported that Kier had hired accountancy firm EY as a financial adviser amid fears in the City that the engineering company could be facing another financial squeeze.
The report said the debt-loaded company may need to appeal to lenders led by HSBC to bring in fresh cash in the next few weeks.
Kier’s share price took a battering in late 2018 after it bungled a rights issue, forcing its lenders to buy the majority of the stock offered after shareholders balked at putting more cash into the company.
More recently the company has been on the comeback trail this year as it moves to cut costs and reduce its debt.
The Cabinet Office and Kier declined to comment.