Home Office Fined £220m In e-Borders Contract Dispute

UK taxpayers have been saddled with a £220m payout to US weapons maker Raytheon following the ruling of an arbitration tribunal, which found that the British government had unlawfully terminated a contract with the company in 2010 to deliver the troubled e-Borders programme.

E-borders, an anti-terrorism project conceived by the Labour government in 2003, was intended to tighten border controls by checking travellers’ details against police, national security and immigration databases. Raytheon won the contract in 2007, but the Home Office terminated the deal in 2010, saying it had no confidence in the company, which was a year late on delivery.

Damages

Raytheon sued for £500m in damages, saying it had met its obligations under the programme, and the UK Arbitration Tribunal has now ruled that the processes by which the now-defunct UK Border Agency reached its decision to scrap the contract were flawed. Raytheon has been awarded £49.98m in damages as a result, as well as £9.6m in disputed contract-change notices, £126m for assets acquired through the contract and £38m in interest.

The Home Office said it “stands by” its decision to end the contract, and said the National Audit Office is to conduct a full review of e-Borders.

“This decision was, and remains, the most appropriate action to address the well-documented issues with the delivery and management of the programme,” said home secretary Theresa May in a Monday letter to Labour MP Kieth Vaz, chair of the Commons home affairs select committee. “We are looking carefully at the tribunal’s detailed conclusions to see if there are any grounds for challenging the award.”

She argued that the other options available to the government would have led to greater costs than those resulting from the tribunal’s ruling.

‘A mess’

“The situation the government inherited was… a mess with no attractive options,” she wrote.

Shadow Home Office minister David Hanson said the verdict was “crushing” and demanded that the Home Office “make clear” why the decision was taken to end e-Borders.

“The home secretary needs to make clear when the e-borders programme will be back on track,” he said in a statement. “As a result of this stalled process, we are still far away from counting people in and out of the UK.”

May said that the original e-Borders requirement was now being delivered via multiple contracts each worth less than £100m.

Raytheon said in a statement that the ruling showed it had “delivered substantial capabilities” under the contract and would continue to work with the UK government in other areas.

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