This agreement comprises a total adjustment of £85 million covering the following elements:
• G4S has agreed to pay all the additional military, police and other step-in costs reasonably incurred by LOCOG, in total about £48 million;
• G4S has agreed a £37 million reduction in their project management and operational costs. This is made up of a significant reduction in the charges for project management - £31 million and an adjustment to address concerns over the scheduling of the workforce to align operational costs with workforce delivery - £6 million.
All figures stated above are exclusive of VAT.
The settlement ensures that the taxpayer's interests have been fully protected in compensating for the difficulties experienced by G4S' shortcomings, while at the same time recognising that G4S ultimately provided over 80% of the man-guarding hours it had contracted to supply over the course of the pre-Games, Games-time and post-Games periods.
Commenting on the settlement, 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.
The Home Office has been consulted on the settlement and fully supports the position reached between LOCOG and G4S.
For further information please contact the London 2012 Press Office
on +44 (0)203 2012 100
Notes to editors:
December 2011: The overall venue security budget was £582 million (comprised: venue security grant of £553 million and LOCOG contribution of £29 million). The G4S Games time venue security framework agreement was estimated at £282 million.
October 2012: DCMS Quarterly Report on the 2012 Games announces that the overall venue security budget was reduced to £543 million following a reduction in the scope of the private security requirement and wider savings (comprised: venue security grant of £514 million and LOCOG contribution of £29 million).
Post Games: G4S presented a total bill (including both Games time venue security and additional work) to LOCOG after the Games for £256 million. This figure took account of agreed changes in scope, including reduced workforce hours given G4S’s failure to meet the requirements of the original contract. It also includes other contracted work outside the original Games-time venue security framework (primarily pre and post-Games as part of Park Operations and Villages) which is not under dispute and amounts to £29m.
Settlement: The final settlement is £171m, which includes the additional work G4S undertook for £29 million which is not in dispute. The settlement imposes a reduction of £85m in the payment due to G4S comprising £48m to cover step-in costs (police and military) and £37m primarily for project management failures. The direct consequence of the settlement is a further saving of £63m to the public purse (the £37m reduction primarily for project management failures, and a £26m saving resulting from changes in the scope of the contract, mainly reduced workforce hours). This brings the total savings to the public purse from the LOCOG Venue Security budget to £102m compared to the position in December 2011.
