Defence contractor Raytheon is suing the Government for £500 million for terminating its e-Border contract
The British government is reportedly locked in a legal tussle with an American defence contractor over a terminated contract. It has emerged that Raytheon is suing the government for £500 million for terminating an IT contract with the UK Border Agency.
It all began back in 2007 under the Labour government when it signed a £650m deal with Raytheon under which it would act as the lead supplier for the consortium building the e-Borders system.
It was clear from the outset that the e-Borders system would be highly controversial, as it involved the compulsory collection of information from all travellers in advance of their journey into and out of the UK. The information about the passengers could be checked against security watchlists.
In addition, the system would also allow the authorities to count everyone in and out of the country. For example, passengers flying out to another country would have to submit their name, date of birth and passport details ahead of the flight, and well before they actually arrived at the airport. If they did not, they faced the risk of being prevented from boarding their aircraft.
In December 2009 it was clear the scheme was in trouble because it was found to be in conflict with EU rules on free movement, and was also facing a row over data protection. To make matters worse, in April 2010 the Home Affairs Select Committee said that the e-Border’s programme was “impossible to achieve in the current timetable“.
Matters came to head in July 2010 when the Home Secretary Theresa May took the decision to end Raytheon’s contract in July 2010 and said that it was in breach of contract terms. Reportedly, the decision was taken jointly with the Efficiency Reform Group (ERG), set up in the Cabinet Office to review the progress and budgets for major projects.
The government made it clear it had serious concerns about the running of the much-delayed programme. According to the Daily Telegraph, ministers had said its performance had been “extremely disappointing”. Yet, it seems that Raytheon received a £5 million payoff from the UK Border Agency for the contract termination.
The Government’s decision did no go down well with the defence contractor, as Raytheon felt it was actually government officials who were to blame because they failed to make the targets and objectives clear. A letter from Raytheon UK CEO, Robert Delgorge, to a Commons Committee has now emerged, alleging the termination was unlawful.
“…we are presently in arbitration with the Home Secretary regarding her decision to terminate Raytheon’s involvement in the e-Borders Programme,” Delgorge wrote. “I would like to clarify that our contract was not ‘suspended’ as your letter suggests.
“In fact, our contract was terminated by the Home Secretary in July 2010 on the grounds that Raytheon was allegedly in material default of its contractual obligations,” he argued.
“We vigorously refute that contention. We maintain that the purported termination was unlawful and that Raytheon is entitled to recover substantial damages for wrongful termination,” wrote Delgorge. “We have made counterclaims in the arbitration in excess of £500 million in respect of these matters.”
Keith Vaz MP, the committee’s Labour chairman, told The Daily Telegraph, “I am deeply disappointed that such a high profile project such as this has ended with such costly litigation with the possibility that the taxpayer will have to pay millions of pounds even though the programme has not been completed,” .
“We need to know if, and why, this company was not given the clear targets and objectives it sought,” he added. “The Committee will continue to pursue this matter until we receive satisfactory answers. Why should the taxpayer foot the bill?”