The Home Office has been ordered by an Arbitration Tribunal to pay £224m to a leading US commercial electronics contractor it sacked for failing to deliver a controversial secure borders programme.
Included in the payment to Raytheon is a £50m compensation payment for damages because the UK Borders Agency failed to follow proper procedure in dismissing the contractor. It was called a “catastrophic result” by Home Affairs Committee chairman Keith Vaz.
Raytheon won the nine-year contract to develop the former Labour government’s e-borders programme in 2007, which would have tracked all emigration and immigration. Shortly after the coalition government was elected in 2010 it abandoned the programme and cancelled Raytheon’s contract, citing loss of confidence in the company because the contract was a year behind schedule. When the company stated its intention to take legal action against the government, the two parties agreed to binding arbitration.
The government has sought to blame the previous Labour administration for the mess, with Theresa May claiming that “the situation the government inherited was therefore a mess with no attractive options. All other alternatives available to the government would have led to greater costs than the result of this Tribunal ruling.”
Her response glosses over the fact that £50 million in compensation was awarded in damages to Raytheon because the correct procedure was not followed when the government dismissed the contractor. In so doing it would appear that the Home Office, by repudiating the contract, cost the taxpayer tens of millions of pounds, plus interest, which could have been avoided if more care had been taken in the process.