G4S should give up Olympics fee, say MPs
By Richard Johnstone | 21 September 2012
Security firm G4S should forfeit its £57m Olympic Games management fee for failing to provide the required number of security staff, MPs said today.
The home affairs select committee said the blame for failing to fulfil the contract rested ‘firmly and solely with the company itself’.
Armed forces personnel were forced to step in to cover security in some venues after G4S admitted it could not provide the 10,400 staff it had committed to recruit and train. The contract with Games organiser Locog was worth a maximum of £284m.
As a result of the failure, total military deployment for the Olympic Games peaked at 18,200 troops, up from the original planned workforce of 7,500.
Committee chair Keith Vaz said that the firm had ‘turned years of carefully laid preparations into an eleventh hour fiasco’.
In a report examining Games security, the committee said ‘a combination of flawed management information and poor communication with applicants and staff meant that G4S senior management had no idea how badly wrong their operation was going until it was too late to retrieve it’.
Despite this, the firm continued to give false reassurances, based on poor-quality data, to Locog, the Home Office and others until a very late stage.
Forgoing the £57m management fee would ‘send a strong signal to the British taxpayer, its biggest client in the UK, that it is serious about making good for its mistakes’, MPs said.
The report urged the government to maintain a central register of high-risk companies that have failed in the past to deliver public services, which could inform future procurement decisions.
Armed forces personnel should also now be considered as possible security providers for future major events from the outset, rather than just as a backup.
Vaz added: ‘Because of the swift actions of the MoD, Home Office and Locog, London enjoyed a safe and secure games. The taxpayer must not pay for G4S’s mistakes. G4S should waive its £57m management fee and also compensate its staff and prospective staff who it treated in a cavalier fashion.’
Responding to the report, G4S said that its board and management had ‘taken responsibility for the inability of the company to deliver, in full, on the Olympic security contract and apologise for this failure’.
However, the firm has estimated it will incur a loss on the contract in the region of £50m, including payment of penalties and liabilities due under the terms of the contract.
Its statement added: ‘As explained by both G4S and Locog to the committee, the £57m “management fee” is not a profit. It relates substantially to real costs which have been incurred such as wages, property and IT expenditure. The final financial settlement is currently under discussion with Locog.’