G4S takes £85m hit for bungled Olympic contract

The figure is considerably higher than the £50m G4S previously estimated it would lose on the Olympic and Paralympic Games contract.

According to Locog, G4S has agreed to pay the full costs of the government having to draft in the military and the police (pictured, below) to fill the gaps after G4S failed to provide 10,400 security personnel – totalling £48m.

It has also agreed a £37m reduction in the fee for the £240m contract – equivalent to a reduction of around 15 per cent.

LOCOG said it was presented with a bill from G4S, accounting for reduced working hours, which totalled £256m. The final settlement is £171m, which LOCOG said amounts to a £63m saving for the public purse.

Neil Wood, Locog’s chief financial officer, said: “We are pleased to have reached an agreement that protects taxpayer’s interests by reducing the payment due to G4S by £85m.

“The savings arising from this settlement brings the total savings to the public purse from the Locog venue security budget to £102m compared to the position in December 2011.

“We would like to thank the military and the police for their exceptional and outstanding support during the games in providing a robust, effective, professional and friendly security operation.

“We would also like to thank the G4S guards who worked alongside the military, the police and the volunteers to deliver a safe and secure games in spite of the high profile challenges faced by the G4S group.”

‘Extremely disappointed’

G4S also confirmed a greater loss on the contract than had been previously anticipated, saying it had lost £70m on the contact and had also incurred £18m of additional costs, including charitable payments, fees and the costs of marketing and sponsorship.

Nick Buckles, chief executive of the group (pictured, below), said: “Whilst we are extremely disappointed to find ourselves in this position, we are pleased to have concluded these negotiations with Locog.

“We have accepted responsibility for the security workforce issues and, as a result of the settlement terms which we have announced today, have ensured that the overall cost to the taxpayer has been reduced significantly against the planned cost.

“The UK government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings.”

Two G4S directors, chief operating officer David Taylor-Smith and head of global events Ian Horseman Sewell, resigned in the wake of an independent review into the company’s London Olympics contract. It was found that the company had filled only 83 per cent of contracted shifts.