No pay for G4S since Olympic Games blunder
Tuesday 11 September 2012
Security firm G4S has not been paid since July 13, Locog chief executive Paul Deighton told MPs today.
The firm has so far been paid £89 to £90 million by organisers but the rest is "up for negotiation", he told the Commons Home Affairs Select Committee.
G4S told organisers on July 11 that it would not be able to provide enough security staff for the Olympics - just over two weeks before the Games started.
Troops and police were drafted in at the last minute to plug the gaps - at their worst the shortage of staff provided by G4S was 35%.
Mr Deighton said the whole contract with the company was worth £236 million, including a £57 million "project management fee".
This included 15% profit for the company, and the rest was mainly the wages of a team who were in charge of recruiting and training staff.
He was asked by committee chairman Keith Vaz: "You have paid £89 to £90 million, all public money, and the rest is up for negotiation, which you will have with them?"
Mr Deighton replied: "Yes."
At best the shortages of G4S staff were 4% and at worst 35% during the Olympics, he told the committee.
Nearly two-thirds of venues saw a shortfall of more than 15%, although they were up to capacity during the transition period and the Paralympics.
London 2012 chairman Sebastian Coe told the committee: "It is difficult to look beyond their inability to deliver on the contracted number of security personnel that we were consistently assured by them that they would be able to deliver."
Charles Farr, Home Office head of security and counter-terrorism, made his first public appearance before the committee.
He said G4S gave no indication that they would struggle to meet the demands of the contract before July 11, and claimed the company "weren't completely open" with organisers in the lead-up to the Games.
"We were given sets of data which gave no indication whatever, even as late as July 1, that there was going to be a problem fulfilling that contract. That data was what G4S relied upon to explain the progress of their programme."
He said he was told on July 1 that 37,000 people had passed training, of whom 25,000 were security-screened and 21,000 accredited. The requirement was less than 15,000.
Nine thousand people were ready to work by that date, up 2,000 on two weeks before, the committee heard.
Mr Farr said: "The data was clearly misleading at the very least."
David Taylor-Smith, G4S's chief operating officer who led its Olympic programme, said the company began giving information to Locog in a different format in May, after concerns about the quality of its data were raised in a report by consultants Deloitte.
G4S chief executive Nick Buckles told the committee that the company was already having problems with numbers on July 3.
But he said it was not until the firm checked the situation in detail on July 10 that staff realised they were in serious difficulties.
Mr Taylor-Smith agreed that the debacle was "a serious failure" and apologised for what had happened.
"As Nick did last time (he gave evidence to the committee), I of course apologise in particular to the members of the armed services and police who stepped in to assist us."
Mr Buckles said most of the £90 million paid so far had gone on salaries and other costs.
G4S will donate £2.5 million to service charities to try to make up for the fact that service personnel had to step in, he told the MPs.
He said the firm will make a £50 million loss because of the cost of additional police and military personnel and other penalties.
"I'm not going to sit here and say we did a great job. But we delivered a significant portion of that contract and our people did an excellent job and played a major part in delivering these Games. We are planning to take a £50 million loss on this contract," Mr Buckles said.
G4S has delivered a number of public sector contracts including the country's first private prison, and services for Lincolnshire police, and he told MPs he hopes the firm's track record will help it recover after the fiasco.
Mr Buckles said: "We hope that our long term track record will stand us in good stead. We're not going to say it's not going to damage our reputation."
An internal review is now being carried out, which could affect whether Mr Buckles remains in his job, he said.
"I care about this company significantly and it would be after talking to the board and the board talking to shareholders that the decision would be made."
G4S fulfilled only 83% of contracted shifts at the Games, and provided 7,800 staff out of a contract that demanded 10,400.
The Government put another 4,700 military personnel on standby, on top of 13,500 initially committed, after G4S admitted its shortfall.
It has already ruled itself out of bidding for the Rio 2016 Olympics security contracts.
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