The world's biggest security firm revealed just weeks before the Games began that it could not provide 10,400 guards, forcing the Government to call on military and police personnel to cover the shortfall.

The firm had originally estimated the loss on the contract, worth around £240 million ($376 million/€279 million), to be around £50 million ($78 million/€58 million).

But it has incurred penalties, waived a large chunk of its management fee and paid for the 4,700 emergency staff that were drafted in to cover the shortfall, it was revealed today.

This agreement comprises a total adjustment of £85 million ($133 million/€99 million) covering £48 million ($75 million/€56 million) for the additional military, police and other costs incurred by London 2012 and a £37 million ($58 million/€43 million) reduction in its project management and operational costs. 

This is made up of a significant reduction in the charges for project management - £31 million ($48 million/€36 million) and an adjustment to address concerns over the scheduling of the workforce to align operational costs with workforce delivery, which is worth £6 million ($9 million/€7 million).


"The UK Government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings," said G4S chief executive Nick Buckles

"We have accepted responsibility for the security workforce issues and, as a result of the settlement terms which we have announced, have ensured that the overall cost to the taxpayer has been reduced significantly against the planned cost."

The group said it had incurred additional costs of approximately £11 million ($17 million/€13 million) relating to charitable donations and external fees and a further £7 million ($11 million/€8 million) relating to the cost of sponsorship and marketing.

All of these costs would be taken in the 2012 accounts as an exceptional charge, it said.

G4S faced an inquiry by MPs after it announced that it could not completely fulfil its contract to provide enough security staff and Buckles faced pressure to resign over the fiasco, which claimed the job of three other top executives at the company.

"We are pleased to have reached an agreement that protects taxpayer's interests by reducing the payment due to G4S by £85 million," said Neil Wood, the financial director of London 2012.  

"The savings arising from this settlement brings the total savings to the public purse from the [London 2012] venue security budget to £102 million ($160 million/€119 million) compared to the position in December 2011."

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