Member Article

Taxpayer picks up £224 million bill for cancelled US borders contract

The Home Office has been ordered to pay £224 million by a binding arbitration tribunal to US corporation Raytheon after sacking the firm for failing to deliver a controversial secure borders programme.

Ministers will pay Raytheon £50 million in damages, £126 million for assets the company delivered prior to being sacked, £10 million to settle complaints relating to changes to the original contract and £38 million in interest payments.

Labour launched the e-Borders programme in 2003 and in 2007 Raytheon won a nine-year contract with the Home Office.

In 2010 the coalition government terminated the contract with the US defence corporation, after claiming it was failing, after it claims the firm fell a year behind schedule.

In its ruling, the arbitration tribunal did not pass judgement on whether Raytheon had failed to meet its contractual obligations.

In a statement to the New York Stock Exchange, Raytheon said: “The arbitration tribunal found that the Home Office had unlawfully terminated [the company] for default in 2010 and therefore had repudiated the e-borders contract.

“The Tribunal denied all Home Office claims for damages and clawback of previous payments. The Tribunal’s ruling confirms that [Raytheon] delivered substantial capabilities to the UK Home Office under the e-borders program.”

In a letter to the chairman of the cross-party Home Affairs Committee, Home Secretary Theresa May says: “The government stands by the decision to end the e-Borders contract with Raytheon. This decision was, and remains, the most appropriate action to address the well-documented issues with the delivery and management of the programme.

“The situation the government inherited was therefore a mess with no attractive options. All other alternatives available to the government would have led to greater costs than the result of this Tribunal ruling.”

Mr Vaz, a Labour MP, said: “This is a catastrophic result. Minister after minister and successive heads of the UKBA told the select committee that the government was the innocent party and that Raytheon had failed to deliver.

“It is now clear that the UKBA didn’t know what they wanted from the e-Borders programme.”

“It is important that those who have responsibility should be held to account for failing the taxpayer in such a costly way.”

This was posted in Bdaily's Members' News section by Clare Burnett .