London council tightens contractor checks after Osborne collapse

Contractors seeking to do business with the City of Westminster will face more scrutiny and stricter safeguards following the collapse of Geoffrey Osborne.

A report by the council’s Audit and Performance Committee on learning lessons from the firm’s demise said a number of robust measures had now been adopted.

Geoffrey Osborne fell into administration in 2024 owing  504 trade creditors £25.9m  – none of which is expected to be recovered.

At the time, the firm had been appointed on Westminster’s Infills Programme to increase affordable housing.

When it collapsed, 64 new homes being built for £51m at Queen’s Park Court, Adpar Car Park and Torridon Car Park, were left incomplete.

Willmott Dixon was appointed as a replacement contractor on the schemes.

A meeting this evening (12 February) of the council’s overview and scrutiny committee will consider the new measures that have been taken to protect it from the risk of major contractors becoming insolvent.

“Following the insolvency, the council has undertaken a lessons‑learned exercise which highlighted, in particular, the need to improve third‑party financial‑risk tools and to ensure that emerging risks and procurement considerations are clearly and consistently communicated to decision‑makers through governance reports,” the report said.

When Geoffrey Osborne was awarded its contracts, the council had been using Creditsafe’s standard reporting to assess financial stability to inform its procurement and contract management risk, the report said.

It added that Geoffrey Osborne’s Creditsafe score of 82 (out of 100) at the time of its collapse was “still classed as very low risk”, so no concerns were flagged with the council.

Geoffrey Osborne had not filed accounts for almost two years at the time of its demise.

Its last full-year audited annual accounts revealed revenue of £325.8m for the year to 30 September 2021, when it generated a pre-tax profit of £675,000.

The report said the council had now implemented robust controls that do not rely on credit scores alone, adding that more financial due diligence will be carried out before contracts are awarded.

In addition, the council has implemented ongoing monitoring during contracts, the use of other financial tools and early intervention if finances weaken.

The council report said more stringent financial protections will be implemented, including larger performance bonds, higher retention levels and parent-company guarantees.

It acknowledged this could affect smaller firms that may struggle to obtain bonds or guarantees, however.

In future, the council said it will not be reliant on a single contractor and will seek to avoid giving multiple projects to one company.

“The insolvency occurred at the most vulnerable stage of the build, just before roof membranes and cappings were due to be installed, leaving the structures exposed,” the report said.

“To avoid similar risks in the future, council officers identified the need for more proactive contract oversight through stronger project management, real‑time performance monitoring and regular site inspections.”

Westminster’s report emerged days after another council – the Royal Borough of Kensington and Chelsea – said it had changed its procurement methods and will make more use of preconstruction services agreements after pausing the third phase of a housing programme due to financial pressures.