Government faces legal action by US firm over e-border system

The government is facing a £500m litigation suit from an American firm that was stripped of its contract to develop the country's e-border system after ministers said it had failed to deliver.

Defence company Raytheon was given a £742m contract to design and implement the IT system that would allow the UK Border Agency to count every person who arrives and leaves the country. The coalition terminated the deal last year, claiming the firm had missed deadlines and delivered substandard results.

But in a letter to the home affairs committee, which has been investigating the problems with the deal, the chief executive of Raytheon UK, Robert Delorge, revealed it was claiming £500m in the courts, arguing that the delays were due to mismanagement by the Border Agency.

The letter said: "The circumstances surrounding the home secretary's decision to terminate Raytheon's contract and engage a replacement service provider in its place are the heart of the arbitration.

"Without going into the details, it is Raytheon's position that the decision was unjustified and unlawful, not least because the delays and other problems on the e-borders programme were attributable to breaches of contract and serious mismanagement of the programme by the UKBA, and not to any fault on Raytheon's part."

The e-border system was supposed to electronically record every person moving in and out of the country. The home affairs committee had previously concluded that they had "no confidence" in Raytheon to complete the project and the company was dismissed in July 2010. IBM was brought in during November to run the basic database, and Serco in April 2011 to provide the interface between carriers and the agency.

Keith Vaz MP, the committee's Labour chairman, said: "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. The committee will continue to pursue this matter until we receive satisfactory answers. Why should the taxpayer foot the bill?"

A separate letter also released by the committee today from Home Office minister Damian Green, responding to questions about the contract, said that only one of the four main parts of the contract had been concluded, with that one having "important capabilities missing".

A UK Border Agency spokesman said: "Last year we terminated Raytheon's contract because it was unable to deliver on key elements of the e-borders programme. The contract has now been transferred to alternative suppliers.

"E-borders continues to reduce the risk of terrorism, crime and immigration abuse."

A spokesman for Raytheon said: "We properly and legitimately responded to a request for information from the Home Affairs Committee Chairman. However given that we are, as the report accurately states, in the midst of an arbitration, and that arbitration is confidential, it was would not be appropriate for us to comment further."

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