Private security firm G4S said on Friday it would be unable to completely fulfill its contract to supply guards for this month’s London Olympics and would incur a loss of up to ￡50 million (US$77.73 million).
The company has been at the center of a political firestorm after the British government admitted on Thursday that extra troops would need to be put on standby due to G4S’ problems processing applicants in time for the start of the Games.
Shares of FTSE 100-listed G4S have fallen in the past 24 hours to their lowest level for almost a month.
G4S said in a statement on Friday that because of difficulties in processing applicants in sufficient numbers through the necessary training, vetting and accreditation procedures, the firm “will be unable to deliver all of the necessary workforce numbers.”
No details on numbers were given.
On Thursday, the British government put an extra 3,500 troops on standby after it became clear G4S looked unlikely to provide the expected 10,400 guards it was contracted to.
British Prime Minister David Cameron warned that G4S, the world’s biggest security firm, would face the consequences for any shortfall.
G4S said it accepted its responsibility for the additional cost of the increased military spending needed to make up the shortfall.
The company said it would incur other “significant” costs as it tries to meet its contract promises.
“Whilst it is not possible to gauge the precise financial impact, it is estimated that the company will incur a loss on the contract in the range of ￡35 million to ￡50 million, all of which will fall in the current financial year,” it said.
G4S chief Nick Buckles has been summoned to give evidence to parliament explaining how the crisis was allowed to happen.
G4S’ contract, worth an estimated ￡284 million, includes managing 3,300 students and 3,000 volunteers.
It has said it has about 4,000 staff working at Olympic venues, with more than 9,000 in addition nearing the end of a delayed training process.
About 23,000 security guards had been due to protect venues as part of the UK’s biggest peacetime security operation, with 13,500 military personnel already earmarked to contribute.
A call up of the additional 3,500 troops would take the tally at the Games to 17,000, more than the 9,500 currently deployed in Afghanistan.
G4S employs more than 675,000 staff working in areas ranging from cash handling to guarding ships from pirates. Its contract with the London Organizing Committee of the Olympic Games would have seen guards providing airport-style checks to search and screen spectators. They would also be responsible for queue management, and protecting the perimeters and equipment.
The company also has contracts with the British government.