UK government pays £150m to Raytheon to settle e-Borders dispute

The UK government has agreed to pay Raytheon £150m in a final settlement of its dispute over the cancellation of the supplier’s e-Borders contract.

Home secretary Theresa May – in one of her final acts before the dissolution of Parliament – confirmed the settlement in a letter to the Home Affairs Select Committee.

“To protect the best interests of the taxpayer, including from further litigation costs, the government has reached a negotiated resolution with Raytheon Systems Limited (RSL). The settlement is a full and final payment of £150m to RSL,” said May.

“This settlement represents a significant reduction on the original award made by the Arbitration Tribunal in 2014, which could have cost around £270m with costs and interest. This avoids any further payments or liabilities for the assets which were transferred to the Home Office, including capabilities which enhance national security by allowing the collection of advanced passenger information for checking against criminal and terrorist watch-lists,” she said.

The dispute has taken five years – and nearly £35m of taxpayers’ money in legal fees – since the government decided to sack Raytheon in 2010 after it had 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 across 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.

In 2011, the supplier began legal proceedings to sue the UK government for £500m. An arbitration tribunal ruled in 2014 that Raytheon delivered substantial capabilities to the UK Home Office under the e-Borders programme and awarded £224m of damages to the supplier.

The Home Office subsequently won an appeal against that decision in February this year, when a judge ruled that the original damages award to Raytheon was “tainted by serious irregularity” and that the claim by Raytheon should be set aside and re-heard by a new tribunal.

Raytheon said it would further appeal the judge’s decision, but that has been concluded now by the £150m it will receive. “This settlement recognises no admission of liability on the part of the government. Both parties genuinely held their positions throughout the process. RSL continues to be a valued supplier to the British government on key defence and commercial pursuits,” said May.

Many of the functions that were intended to be delivered by e-Borders – such as exit checks for people leaving the UK – have still not been implemented.

Image courtesy of dannyman on Flickr.