Friday, 9 March 2012

Security Contract Pushes Costs of Olympics Towards £11 Billion

Today the House of Commons Public Accounts Committee reported that the £9.3 billion Public Sector Funding Package for this summer's Olympics is close to running out, because of a £271 million increase in the cost of security for the venues and £41 million for more extravagant opening and closing ceremonies. The report states that "the increase in the overall cost of venue security is the main reason why the Public Sector Funding Package is now so finely balanced". In a statement, the committee chair Margaret Hodge now estimates that the full cost to the public of the Games and legacy projects is "already heading for around £11 billion".

The report highlights that in December 2010, the London Organising Committee (LOCOG) contracted with the global private security firm G4S to provide 2000 guards, expected that the remainder would come from volunteers and a government funded programme through colleges of further education. By the end of 2011, however, the overall estimated number of security guards required had more than doubled to a maximum of 23700 on peak days. This is why the Ministry of Defence has agreed to provide 7500 military personnel to work during the Games, in addition to around 3300 civilian volunteers. The remaining requirement of 13000 will be supplied by G4S.

G4S has done very well financially out of the barrel that LOCOG finds itself bent over. Following the renegotiation of the contract, there has been a 6-fold increase in the number of security guards it provides - but a nearly 9-fold increase in programme management costs (from £7 million to £60 million) and more than a 20-fold increase in operational costs (from £3 million to £65 million). The value of the contract has risen from £86 million in December 2010 to £284 million in December 2011. The Public Accounts Committee says that "it is not clear from the information provided to us that the increased costs under the contract with G4S reflect only the changed requirements, or whether, they are also the consequence of renegotiating the contract in a non-competitive environment".

Sadly, the reality is that like everything else to do with the Olympics, the costs remain obscured by a lack of transparency. After all, it was only a week ago that the government was claiming that more than £100m of the £9.3bn budget would be handed back to the Treasury. What we do know is that the biggest beneficiaries of the Olympics are more likely to be companies like G4S than local people - the profits of its UK operations rose by 11% in 2011 to £50 million.

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