Recovering costs from G4S will only make G4S recover the recovered costs from other areas of their business, so I expect we will see more escaped prisoners and more security lapses at nuclear facilities, etc.
Besides, the firm will have contractual obligations in other areas of the business (e.g. prisoner transportation and security at nuclear facilities), and if it reneges on those, it will face similar consequences.
In any case I agree with your OP that these types of cut and dry presentations are never helpful, and we should be seeking to understand the appropriate context for different solutions instead of generalising.
Precisely. Thus G4S have a clear incentive not to let their standards slip elsewhere in the business and face further damage to their finances, or for that matter their reputation.
G4S is a massive multinational with ~£7.5bn annual revenue. They're not going to spiral into bankruptcy over this Olympics debacle.
That they still have a reputation worth defending is fairly surprising given their history.