No idea, I just remember reading that they are being subcontracted by a private firm - whether or not they are paid twice or just seconded for the time the olympics are on I couldn't tell you. Pretty sure I read it in the FT.
Without knowing for definite I'd hazard a guess that they'd simply be seconded rather than getting paid twice i.e. you lads are reporting to this company for the duration of the Olympics, you do what they tell you and you'll get your normal wages as normal (maybe plus overtime if that exists in the armed forces now?).
It works out cheaper overall than employing private security firms and there isn't an issue with getting enough security personnel that are trained to a sufficient degree if you're employing the armed forces to provide the cover - they're already trained above and beyond what is needed.
Two war ships as well?
What are they going to do?
Have you taken a look at the Olympic site? It's right on the Thames so to have no security measures on the water would seem a shade foolish - I don't know exactly what capability they propose to have but to have some sort of facility for security would be sensible.