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.”

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?