Taxpayer left with £244m bill to compensate US defence giant


Taxpayers have been left to foot a £224m bill after a tribunal ruled that Theresa May, the Home Secretary, made an unlawful decision to cancel a failing IT project.

In a disastrous ruling for the Government, an arbitration panel found ministers failed to follow proper processes before cancelling a £750m contract with the American defence company Raytheon to deliver the “e-borders programme”, a system that was supposed to check the details of passengers arriving and leaving the UK and to screen them for security purposes.

The project was struck in 2007 but hampered by delays and was eventually cancelled in July 2010 soon after the Coalition came to power. Following talks with senior officials at the Treasury and the Cabinet Office minister Francis Maude, Mrs May took the final decision after saying she had lost confidence in Raytheon.

However, the company sued and on Monday night it was announced that it had succeeded in forcing the huge settlement from the Government – including £50m in damages – after a tribunal ruled that senior UK Border Agency [UKBA] officials had failed to brief Mrs May properly on whether the company had an arguable case to hold on to the deal.

Keith Vaz, the chairman of the Home Affairs Select Committee, said: “This is a catastrophic result. Minister after minister and successive heads of the UKBA told the ... committee that the Government was the innocent party and Raytheon had failed to deliver.

“We have pursued this issue for five years and Raytheon informed us that the UKBA had given them no benchmarks against which they were to perform. It is now clear that the UKBA didn’t know what they wanted from the e-borders programme. We will want to hear further from Lin Homer, the then head of the UKBA, as to why she sanctioned such a defective agreement. It is important that those who have responsibility should be held to account for failing the taxpayer in such a costly way.”

Mr Vaz was responding to a letter to him from the Home Secretary, who announced the tribunal had ruled against the Home Office. “The Government stands by the decision to end the e-borders contract with Raytheon,” wrote Mrs May. “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.”

Mrs May said that she would ask the National Audit Office to review how the e-borders scheme was managed from its inception.

She also said the Home Office’s permanent secretary, Mark Sedwill, will investigate the advice that senior immigration officials gave to ministers before the decision was taken to terminate the contract.

In a further statement, the immigration minister, James Brokenshire, said: “The situation we inherited in 2010 was a mess.  Key milestones had been missed and parts of the programme were running at least a year late.

“The contract, signed in 2007, had already cost the taxpayer £259.3m and yet wasn’t delivering,” he added.

“We are considering further legal options in the light of the arbitration decision.”

In a statement to the New York Stock Exchange, Raytheon said: “The arbitration tribunal found that the Home Office had unlawfully terminated [the deal with 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 programme.”

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