Reuters London

Security group G4S missed out on contracts to run British prisons yesterday, paying the price for embarrassing the government by failing to provide enough guards at the London Olympics.

The Ministry of Justice was widely expected to hand the majority of five contracts to manage seven state-run prisons to the private sector, but instead said it would keep three under public sector management after the bids failed to impress.

G4S missed the cut on deals to run six prisons, including Wolds in northern England, a prison which the company has managed since 1992, but which will now return to the public sector in July next year.

French caterer Sodexo, British outsourcer Serco and a venture between US prisons firm MTC and Britain’s Amey – owned by Spanish group Ferrovial – are in the running for the remaining two contracts to run Northumberland prison and three jails in South Yorkshire.

Coldingley, Durham and Onley prisons will remain under public sector management.

G4S, which runs six prisons, was disappointed and its shares were 5.2 percent down at 1.28pm in London.