Home Office To Pay £223m For Scrapped Contract

The Home Office has been ordered to pay out more than £223m to a US defence company after it was found to have unlawfully ended a contract to provide a troubled border control scheme.

A tribunal awarded Raytheon Systems Limited £49.98m in damages after it found the way in which the now-disbanded UK Border Agency had decided to scrap the agreement over the controversial e-borders programme was flawed.

The department must also pay Raytheon £9.6m for disputed contract change notices, £126m for assets acquired through the contract between 2007 and 2010 and £38m in interest.

E-borders, devised by the Labour government in 2003, was designed to count everyone in and out of the UK by collecting advance passenger information on all scheduled inbound and outbound journeys to and from the UK.

But the system had been dogged by problems, including delays and brief changes.

In a letter from the Home Secretary to the chairman of the Home Affairs Select Committee Keith Vaz, Theresa May said: "The Treasury will work with the Home Office to make sure these costs are met without any impact on frontline services.

"We are looking carefully at the tribunal's detailed conclusions to see if there are any grounds for challenging the award.

"The Government stands by the decision to end the e-borders contract with Raytheon (NYSE: RTN - news) .

"This decision was, and remains, the most appropriate action to address the well-documented issues with the delivery and management of the programme."

The Home Secretary said key targets had been missed by Raytheon in 2010 and parts of the programme were running at least a year late.

"The situation the Government inherited was, therefore, a mess with no attractive options," she said.

"All other alternatives available to the Government would have led to greater costs than the result of this tribunal ruling."

She said the National Audit Office had been asked to conduct a full review of e-borders from the start.

The Home Secretary also said the original e-borders requirement - to record advanced passenger information for checking against terrorist and crime watchlists - is being delivered.

In a statement to the New York Stock Exchange, Raytheon, said: "The tribunal's ruling confirms that (Raytheon) delivered substantial capabilities to the UK Home Office under the e-borders programme.

"Raytheon remains committed to partnering with the UK Government on key defence, national security and commercial pursuits."

David Hanson, Shadow Home Office Minister, said: "This is a crushing verdict on a Home Office decision made by David Cameron's government, which has cost the taxpayer hundreds of millions of pounds over the last four years."