MPs call on G4S to forgo £57m fee after Olympics failure

 

Committee chairman Keith Vaz said a "high risk register" was needed

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G4S should forgo its £57m management fee after failing to supply the required number of Olympics security staff, a committee of MPs has said.

It should also compensate people who were accredited for Olympics work with the firm but not given any shifts, the Home Affairs Committee argued in a report on Olympics security.

The firm's Olympics contract was worth £237m, including the management fee.

G4S said the £57m management fee was "substantially" real costs not profit.

But committee chairman Keith Vaz said the firm had delivered an "11th-hour fiasco" after "recklessly boasting" that it could meet the terms of its contract.

G4S admitted last month that the Olympic contract had cost it £50m after it failed to deliver the 10,400 Olympic security guards needed in time.

The government was forced to turn to the military for the extra staff, for which G4S confirmed it would pay.

'Shambles'

G4S chief Nick Buckles briefs MPs on 11 September: "We delivered a significant portion of the contract"

"The largest security company in the world, providing a contract to their biggest UK client, turned years of carefully-laid preparations into an 11th-hour fiasco," Labour MP Mr Vaz said.

Mr Buckles had provided the government with information that was "at best unreliable, at worst downright misleading", he added.

Mr Vaz explained: "Twenty-four hours before they admitted their failure, Nick Buckles met with the Home Secretary and did not bother to inform her that they were unable to deliver on their contract, even though he knew about the shortfall a week before."

Armed forces personnel should be considered as security guards from the outset, rather than just as an emergency back-up, the committee recommended in its report.

G4S should also offer compensation to budding security staff who had been trained and accredited to work at the Olympics but had not been given any shifts due to management errors, it said.

The report also suggested that ministers should maintain a blacklist of companies to avoid when making future procurement decisions.

Military at the Olympic Park The government was forced to call in the military to plug the shortfall in security staff

A G4S spokesman said: "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."

At a Home Affairs Committee hearing, Mr Buckles told MPs that he expected Games organisers to pay his company "exactly in line" with the £237m contract.

He had previously described the staffing crisis as a "humiliating shambles".

Locog chief Paul Deighton earlier said it had paid G4S £90m up to 13 July, but described the remaining £147m as "up for negotiation".

 

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  • rate this
    -1

    Comment number 436.

    The requirements changed to an impossible level. How can anyone recruit 15,000 people for temporary work, with no prospects of being continued, months in advance and require the additional step of security clearance. They did a better job then the government, which has shortages on teachers, nurses, doctors etc. Does the government call for punishment for its own shortfalls?

  • rate this
    +7

    Comment number 435.

    If I'm asked to fulfil a service and completely balls it up, I don't demand my full fee - if anything, I beg for forgiveness and thank my lucky stars that I haven't received a fine. Nick Buckles is his name, sadly he nicks but doesn't buckle.

  • rate this
    +11

    Comment number 434.

    And this is the company that the government favours to run prisons and outsource police work to, while cutting funding for the police by 20%? There's a great deal of hypocrisy here all round.

    Too many vested interests!

  • rate this
    +7

    Comment number 433.

    Has contracting out or privatisation ever worked out well for anything?

  • rate this
    +3

    Comment number 432.

    They did not deliver what they agreed to - where have I heard that before? Ahhhhh MPs - should we not pay them everytime they lie to the Great British Public???

  • rate this
    +3

    Comment number 431.

    416.b223dy Unsure about the "job losses" comment. Those in G4S employ before Olympics would still have work, surely?
    And those that were taken on , supposedly for the Olympics, were I imagine, aware of a short-term contract. Fact is that G4S failed miserably, and financial penalties - of the strongest sort - should apply. Others have said use our troops (to be paid) as a matter of course. I agree

  • rate this
    +3

    Comment number 430.

    The most important failure is with the people who placed, increased and failed to manage the contract. Why are they not called to account? There seems to have been no due diligence to ensure the supplier were capable of delivery.

    As for GS4, the contract should have penalty clauses which spell out the cost to them of failure. A big flaw in the contract if it hasn't - who agreed it?

  • rate this
    -4

    Comment number 429.

    @418 Paul,

    No it isn't that simple. Just like in real life.

    Do you actually know what the breach of contract was? Do you even know how many different contracts were in place for different things for G4S to provide to the Olympics?

  • rate this
    +4

    Comment number 428.

    417.Michael Lloyd
    "On the contrary, it will send out the long-overdue message that you renege on the contract at your peril"

    No - it sends a message that the contract you are entering into isn't worth the paper its written on. If G4S has 'reneged' on the contract then that should be dealt with in accordance with the terms of the contract. Not on the basis of public opinion.

  • rate this
    +6

    Comment number 427.

    Most of G4S's revenue comes from overseas contracts with foreign powers. If, as a result of withdrawing payment, G4S choose to not submit bids for any further UK contracts it will be no great loss to us or them.

    As to any implied message being sent to government contractors, I feel that the same applies. Those contractors that take their business seriously will not be concerned.

  • rate this
    -2

    Comment number 426.

    showcase uk in the best possible manner
    media stirring it up for neg sides of lympics
    pay no way
    give money to Royal Britsh Legion,
    to help those who help country in there hours of need

  • rate this
    +6

    Comment number 425.

    #414 Glad to see the banks make an appearance. It just wouldn't be HYS without it!

    You've made my day!

  • rate this
    +6

    Comment number 424.

    A "Management Fee" implies that there was some "Management" of the contract. As there clearly was not, the fee should not be paid.

  • rate this
    -1

    Comment number 423.

    G4S should propose a lower figure, the government should make a quick decision and we should all move on. This enquiry must already be costing money and we still don't know if G4S will get the full amount or not. This is a waste of resources in my opinion, the G4S boss should be sacked and they should be blacklisted for 5 years for being useless. Simples.

  • rate this
    +3

    Comment number 422.

    This just summarises most privatised companies in this country. The Government try to brainwash us with the usual "Best value for money" comments but we wll know that companies like G4 will use the cheapest labour so they can maximise profit.

    Pretty much the same as hosiptal cleaning, council road repairers etc

  • rate this
    +4

    Comment number 421.

    "Mr Buckles told MPs that he expected Games organisers to pay his company "exactly in line" with the £237m contract."

    The Games organisers had expected G4S to provide security "exactly in line" with the contract; G4S spectacularly failed to do so, and thus has no right to expect payment "exactly in in line" with the contract. Their sense of entitlement is astounding and unjustified.

  • rate this
    0

    Comment number 420.

    351 ClaudeBalls

    You miss the point; I am not defending a "New" Labour Secretary of State who behaves like a Tory. This Government is carrying out a sustained and idologically driven systematic attack on all areas of the public sector.

  • rate this
    +3

    Comment number 419.

    As the Coalition is busy outsourcing everything that hasn't already been outsourced/privatised I wonder if one of them could explain the benefits to the country of such actions?

    After all, there seems to be a lack of examples that back the concept - have we seen prices fall &/or service improve in:

    Water
    Electricty
    Gas
    Railways
    "Security"...???

  • rate this
    +21

    Comment number 418.

    Isn't this simple ? G4S were contracted to supply certain services and failed so to do. A clear breach of contract and thus rendering them liable to punitive measures. If G4S wants to play hard ball over this then the Govt should do what any customer does when dissatisfied take their business somewhere else (ALL OF IT) that should make G4S shareholders wake up.

  • rate this
    +6

    Comment number 417.

    "370.
    p_fuel13 I don't see what this has to do with MPs. G4S entered into a contract with LOCOG and it is that contract which should govern what happens now. Using political pressure to override a negotiated contract will do the government no favours in future procurement exercises."

    On the contrary, it will send out the long-overdue message that you renege on the contract at your peril.

 

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