The public’s value for money from the security contract for the London 2012 Olympic Games has been queried by a committee of MPs. A jump in the cost of contract security was among the concerns of the Committee of Public Accounts, in its report on preparations for the London 2012 Olympic and Paralympic Games.
The senior Labour MP Margaret Hodge, chair of the committee, said: “We are particularly concerned about the significant increases in the security bill. LOCOG now needs more than twice the number of security guards it originally estimated and the costs have roughly doubled. It is staggering that the original estimates were so wrong. LOCOG has had to renegotiate its contract with G4S for venue security from a weak negotiating position and there is a big question mark over whether it secured a good deal for the taxpayer.”
Margaret Hodge was speaking as the committee published its 74th Report of this Session based on evidence from the Department for Culture, Media and Sport, the Home Office, LOCOG, Transport for London and the Olympic Park Legacy Company.?The MPs’ report pointed out that the Olympic Games are a huge endeavour against a fixed deadline and under the eyes of the world. The Government’s preparations and management of the £9.3 billion Public Sector Funding Package are led by the Department for Culture, Media and Sport. The Department works with a range of bodies including the Olympic Delivery Authority, which is responsible for the construction of new venues and infrastructure required for the Games, and the London Organising Committee of the Olympic and Paralympic Games (LOCOG), which is responsible for staging the Games.??
LOCOG admitted that its initial estimates for the cost and scale of venue security were based on a “finger in the air estimate”.?The number of security guards required in and around the venues has more than doubled from LOCOG’s early estimate of 10,000 guards to 23,700. Consequently, the total cost to the Public Sector Funding Package of venue security has nearly doubled in a year from £282 million in 2010 to £553 million in December 2011. Some 7,500 of the extra guards will be military personnel. LOCOG and its security contractor, G4S, now face a significant challenge to recruit, train and coordinate all the security guards in time for the Games, according to the report.?LOCOG has had to renegotiate the contract for venue security it awarded to G4S in December 2010. However, there is no evidence that the Government has secured any price advantage, even though the value of the business it is putting to its contractor has increased from £86m to £284m. Despite the assertions of LOCOG and the Home Office, we consider that LOCOG’s estimates for venue security could have been better informed much earlier, and that LOCOG’s late planning undermined its negotiating position and ability to drive down costs.?The Olympic Delivery Authority’s programme is on track and within budget. The Delivery Authority’s management of its building programme has been exemplary. However, due mainly to significant increases in the cost of venue security, the likelihood of staying within the overall £9.3 billion Public Sector Funding Package is very finely balanced once the Department’s own best estimates of the most likely costs are taken into account.
G4S comment
G4S commented that the co-operation and openness shown by LOCOG and G4S throughout the security workforce negotiations has been badly misrepresented by the Public Accounts Committee (PAC) report. The contractor said that the report was prepared without consultation with it and contained a number of inaccurate assumptions. The firm pointed out that the initial estimates of the security workforce requirement provided the basis on which G4S bid for the contract at the time. Since then, LOCOG has further developed its security strategy for the Games, which resulted in a larger workforce being required. The security firm stressed that it has been absolutely transparent with LOCOG, the Home Office and others while agreeing the increased security workforce. Contrary to the PAC report, the firm agreed to pass through significant extra costs, such as the cost for SIA licences for all officers, at cost price without charging any margin.
