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.


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

    Comment number 636.

    ... and as for the proposed list of dodgy suppliers - good luck with that in the courts! It's been tried in the private sector, and busted by judges. (Conspiracy, prejudice ... you name it.) It's yet more MP fantasy. We may elect them, but they have lost touch with the real world. You'll find more common sense (maybe not from me) in these comments than in the average House of Commons committee.

  • rate this

    Comment number 635.

    Companies who take public money for payment of contracts have to learn that either they deliver the promises or suffer the consequences. G4 must now suffer the consequences but a fair payment should be made with a calculated deduction for the failings.

  • rate this

    Comment number 634.

    Im sure they'll be paid in full.

    Unfortunately, there seems to be far too many links, liason's between g4s, politicians and the highest level of policing.

  • rate this

    Comment number 633.

    For a long time now government contracts have gone to a handful of businesses, whether these are for security, IT or other things. Often these companies have a history of ineptiturde with previous contracts or are under investigation in other countries.

    G4S will continue to get lucrative government contracts regardless. I don't know why but I can guess.

  • rate this

    Comment number 632.

    Let's remember (a) that if a load of MPs (the people with the duck huts) tell us it's day, we should look out of our windows; (b) that Commons committees have no responsibility and can talk all day - it will make no difference; (c) that Keith Vaz isn't exactly Mr Shy when it comes to publicity. G4S letting us down is one thing - this sort of bullying (from that lot!) leaves a sour taste.

  • rate this

    Comment number 631.

    The way I remember it was that G4S would "pay" the troops that were used, now it turns out they have "donated" £2.5m. A big difference seeing as the £2.5m will be written off as tax deductable

  • rate this

    Comment number 630.


    Indeed ;-) I think it would be great idea, before any more payments are made, or not, for the whole contract letting process to be publicly examined by experts in the field (i.e. those who already provide such staff) to see it G4S's bid was ever achievable. Just to put my mind at rest. Allegedly. Best not mention Virgin Rail, which isn't likely to be similar in any way. Not.

  • rate this

    Comment number 629.

    When will Government see the risk in these situations? G4S is a £1.5billion company according to latest accounts - however that figure includes £2.5billion of "goodwill and other intangible assets" as well as £2.2billion of borrowings - shareholders interests reduced last year ie a loss! FirstGroup is even worse with "goodwill" equal twice the net asset value and £1.8billion of borrowings

  • rate this

    Comment number 628.

    Not defending G4S but I feel they were also let down slightly. In order to employ that amount of people for a short period cannot be done too far in advance otherwise when the staff are required they have either got other employment or changed their minds. However the accreditation to receive an SIA licence is done by the Government (and very slowly). Also some work was also sub-contracted

  • rate this

    Comment number 627.

    I've seen how some big private companies exploit public sector (and other) contracts. The senior management seem to have no integrity. They want big bonuses and status. Staff are cattle to be hired and fired. If they protest, sack them.

    The only way to solve the issue is to split work up to small companies and manage contracts properly. But maybe 'links' between some individuals are too strong ?

  • rate this

    Comment number 626.

    623. Ex Tory Voter
    From what I can tell, government based contracts are handed out on the buddy buddy system. But then I have absolutely no proof of this. So let's put the word allegedly in there somewhere.

  • rate this

    Comment number 625.

    It's all well and good to try to score political points but one could hardly expect the Home Secretary to do other than ask responsible management for up-to-date information from G$S' senior management. She met the CEO one-week before the shortfall came out & when the CEO of G4S already knew but he failed to communicate anything was untoward. The Government should sue G4S for a very large sum.

  • rate this

    Comment number 624.

    Lets have real capitalism

    If you fail to deliver you dont get paid.

    Market forces

    Funny that those who preach capitalism dont like the PaintShopPro when It all goes horribly wrong

  • rate this

    Comment number 623.


    Why do people think private companies are guaranteed to succeed? "

    And why did they pick G4S, who have no experience in this area, when there are dozens of companies who regularly provide 10s of thousands of stewards/security people to events every year. A cynic might jump to certain conclusions...

  • rate this

    Comment number 622.

    615 - Salaried employees (like the G4S management but unlike their employees) are self-evidently different.

    How about this - you utterly and completely cock up despite endless assurances to the contrary and many many opportunities to come clean - then you demand your annual contractual bonus?

    G4S managers will fight tooth and nail for their bonuses and it will be tribunal time if they don't

  • rate this

    Comment number 621.

    Why do people think private companies are guaranteed to succeed? Most fail, the ones that succeed have shown that their model works. Government picking a private company is effectively a lottery and they are more likely to pick a loser than a winner. The difference between public and private is that public services get one chance to get it right, and rarely does it work out well.

  • rate this

    Comment number 620.

    £147 million "up for negotiation". No way.
    There must surely be penalty clauses in the contract with G4S that prevents them being paid for the shambles they caused. This is standard in contractual agreements for large jobs. I know the Tories love privatisation of everything but even they must admit that G4S is not fit for purpose. Just as well the Police and Army aren't privatised yet.

  • rate this

    Comment number 619.

    If you arrange a wedding and then the caterer does not bring enough food and you have to order KFC, you would expect a `substantial` discount as compensation for almost ruining your event. Apart from the bad publicity for Britain around the world they caused. Fortunately the troops were great hosts as well as the best security. It could have been a PR disaster but no-thanks to G4S.

  • rate this

    Comment number 618.


    How about this, YOU work for a month 9-5 monday to firday. Do you job ok but make a couple of mistakes (we have all done it) then your boss doesnt pay you....fair????"

    Totally irrelevant, you are on a salary. If you are a subcontractor and fail do undertake you commitments then you expect not to be paid, just as G4S have failed to deliver.

  • rate this

    Comment number 617.

    How much more empirical evidence is needed to show that big private companies are no more efficient than the public sector - and in this case, less so.


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