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19 August 2014 | Gurjit Degun
The Home Office has been ordered to pay £223.6 million to an IT supplier that it sacked in 2010 for failing to meet targets.
Home Secretary Theresa May said that Raytheon Systems has been awarded almost £50 million for damages, and £9.6 million for disputed contract changes where parties could not, during the contract, agree the value. A further £126 million will be paid for the assets acquired through the contract between 2007 and 2010, and interest of £38 million has been added.
The eBorders programme tracked passengers entering and leaving the UK, checking the details against police, security and immigration watch lists. The contract was worth around £750 million. When it was terminated it had cost the taxpayer £259.3 million including £195 million in supplier costs.
In a letter to the Home Affairs Select Committee, Theresa May said: “The government stands by the decision to end the e-Borders contract with Raytheon. Key milestones had been missed and parts of the programme were running at least a year late. Raytheon Systems had been in breach of contract since 2009. Prolonged negotiations had taken place under the previous government which had led nowhere. The situation the government inherited was therefore a mess with no attractive options.”
She said that had the contract not been terminated, it would have cost the government an extra £97 million.
“While the Tribunal has not found against the decision to terminate the contract, it has raised concerns about how the Raytheon contract was managed by the UK Border Agency and the processes involved in deciding to terminate and how it was carried out,” wrote May.
“The government has already taken steps to make sure this kind of thing should not happen again. Since the Raytheon contract was signed, the government has improved its approach to procurement and would never enter into such a contract today. 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.
“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.”
The government said it will also look into whether there are any grounds for challenging the costs awarded to Raytheon.
A statement from Raytheon said: “The tribunal's ruling confirms that Raytheon Systems delivered substantial capabilities to the UK Home Office under the eBorders program. Raytheon remains committed to partnering with the UK government on key defence, national security and commercial pursuits.”