Jeremy Corbyn has accused the Government of "negligence" over Carillion as he urged Theresa May to end the "costly racket" of private companies running services for the public.
The Labour leader said the "ruins" of the collapsed construction giant lie around the Prime Minister and he called for private firms to be "shown the door".
Mrs May said a third of government contracts with Carillion were let by the previous Labour administration, adding she wants to provide "good quality public services, delivered at best value to the taxpayer".
The fate of Carillion dominated the pair's exchanges at Prime Minister's Questions.
Concluding his attacks on the Government, Mr Corbyn said: "This isn't one isolated case of Government negligence and corporate failure - it's a broken system.
"Under this Government, Virgin and Stagecoach can spectacularly mismanage the East Coast Main Line and be let off a £2 billion payment.
"Capita and Atos can continue to wreck the lives through damaging disability assessments of many people with disabilities and win more Government-funded contracts.
"G4S promised to provide security at the Olympics - failed to do so and the Army had to step in and save the day.
"These corporations need to be shown the door - we need our public services provided by public employees with a public service ethos and a strong public oversight.
"As the ruins of Carillion lie around her, will the Prime Minister act to end this costly racket of the relationship between Government and some of these companies?"
Mrs May cited Labour's involvement with Carillion before outlining the Government's plan for public services.
She added: "We're making sure in this case that public services continue to be provided, that workers in those public services are supported and taxpayers are protected.
"But what Labour oppose isn't just a role for private companies in public services - it's the private sector as a whole."
Mrs May said the vast majority of workers in the country are employed in the private sector but claimed Labour has "turned its back on investment, on growth and on jobs".
At one stage Mrs May refused to provide a response to Mr Corbyn, telling the Commons: "I'm very happy to answer questions when (Mr Corbyn) asks one. He didn't."
One Labour MP could be heard labelling Mrs May an "absolute disgrace".
Mr Corbyn said: "I asked the Government if they'd been negligent or not - and they clearly have been very negligent."
The PM also took aim at Emily Thornberry after the shadow foreign secretary shouted at her.
Mrs May said: "Can I say to the shadow foreign secretary, I will indeed answer the question but I know she herself has praised Carillion in the past for the work they have done."
Ms Thornberry appeared to ask "Have I?" to a colleague before laughing and continuing to watch the exchanges.