Raytheon wins £224m from Home Office over e-Borders cancellation

A tribunal has found the Home Office unlawfully terminated a contract with Raytheon Systems Limited (RSL) over its e-Borders programme.

The US defence contractor has won over £220m in damages, after the Home Office terminated a contract to supply an immigration computer system for the UK Border Agency in 2010.

The government decided to sack Raytheon four years ago after it had serious concerns about the running of the £750m e-Borders contract, which had been seriously delayed.

The e-Borders programme was first commissioned in 2003 to improve the use of information to track people moving in and out of the UK’s borders. The aim was to conduct checks on travellers at the point of embarkation to the UK rather than on arrival in the country.

A pilot project called Semaphore was delivered by IBM in 2004, and was due to be replaced by the Raytheon-led Trusted Borders consortium. But that deal was cancelled in July 2010 due to continued delays in delivering key milestones.

In 2011, the supplier began legal proceedings to sue the UK government for £500m. The Arbitration Tribunal's ruling concluded that RSL delivered substantial capabilities to the UK Home Office under the e-Borders program.

The £224m in damages ordered to be paid to Raytheon were broken down in a letter written by the Home Secretary, Theresa May *:

• £49,980,807 for damages
• £9,600,851 for disputed contract change notices
• £126,013,801 for the IT assets created by Raytheon between 2007 and 2010
• £38,000,000 in interest payments

But a statement from Raytheon claims that the monetary relief would be in the region of £185m. The statement also said that the Home Office had “wrongfully retained the £50m it had drawn on RSL letters of credit in April 2011”, but it is not clear whether this amount is part of the wider damages of  £185m. Raytheon told Computer Weekly it couldn't comment any further at this time. 

Meanwhile, minister for immigration and security, James Brokenshire, said that the government stands by its decision to end the e-Borders contract with Raytheon, calling it “a mess.” The government is also considering further legal options after hearing the conclusions of the tribunal.

“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 £259.3 million and yet wasn't delivering,” he said.

"The government has already taken several steps to make sure this situation should not happen again. The failing UK Border Agency has been brought back into the Home Office and split into three separate commands which are directly accountable to ministers.

"Since 2010, the government has adopted a new approach, to reduce and spread the risk in IT projects costing more than £100m. Rather than having one big contract, projects are built up using a group of smaller agreements, reducing the risk exposure arising from failure in a specific contract.

Brokenshire said that the Home Office has today also asked the National Audit Office to conduct a full review of e-Borders from its inception.

A statement on Raytheon’s website said the supplier remains “committed to partnering with the UK government on key defence, national security and commercial pursuits.”