The British government will have to pay out at least £224 million ($373m) to a US defense contractor after an arbitration court criticized the UK Border Agency for various failings in a long-awaited ruling on the controversial e-Borders programme.
In a letter to the Home Affairs Select Committee, Home Secretary Theresa May explained that the Arbitration Tribunal had awarded US firm Raytheon around £50m ($83m) in damages, £10m ($17m) in “disputed contract change notices”, £128m ($213m) for “assets acquired through the contract”, and £38m ($63m) in interest on those sums.
The ill-fated e-Borders scheme was launched in 2007 by Tony Blair’s Labour government in a bid to bolster security.
It was designed to collect and store data on people leaving and entering the UK, matching it against lists of known terrorists and criminals.
However, Raytheon’s contract was terminated in 2010 by the new coalition government after a series of delays, and the programme “re-scoped”.
“Key milestones had been missed and parts of the programme were running at least a year late. Raytheon Systems Ltd had been in breach of contract since 2009. Prolonged negotiations had taken place under the previous government which had led nowhere,” May said in her letter.
“The situation the government inherited was therefore a mess with no attractive options.”
However, the ruling handed down by the jointly agreed tribunal on Monday criticized the now defunct UK Border Agency for failing to brief the Home Secretary on whether Raytheon was to blame for the project failures or not.
The government has now asked the National Audit Office to review how the deal was handled and the advice given to ministers.
The government has also changed its approach to procurement to avoid this kind of thing happening again, said May.
“Since 2010 the government has adopted a policy of disaggregating larger, longer-term contracts worth more than £100m. This means the risk of failure by a private sector contractor is pooled and the taxpayer is protected,” the letter noted.
“Shortening the contract terms and limiting scope is ideal for IT contracts where the requirements and environment are subject to change. Smaller contracts are easier to define, manage performance and deliver to schedule. There is also greater resilience to contractual or supplier failure.”