Award for cancellation of e-Borders contract is set aside by court

An award of £224m damages to a Home Office contractor over the cancellation of the e-Borders contract has been set aside after a court ruling that it was “tainted by serious irregularity”.

The decision to set aside the award to the supplier, Raytheon Systems Ltd, a subsidiary of a major US defence corporation, was made by Mr Justice Akenhead in the technology and construction court on Tuesday. It follows a successful Home Office challenge to the original award made by an arbitration tribunal.

The home secretary, Theresa May, has written to the chairs of the Commons home affairs and public accounts committees, telling them: “The judge has found there was seriously irregularity affecting the award, therefore the award will be set aside in its entirety to be determined by a different tribunal. The judge has granted both parties permission to appeal.”

The decision represents the latest twist in the long-running saga in the £750m e-Borders programme which was first launched in 2003 on the promise of being able to track all passengers in and out of Britain within 10 years.

Raytheon was engaged by the Home Office in 2007 to design the e-Borders technology system. However, by 2010 the department had terminated the contract on that grounds that key milestones had been missed and parts of the programme were running at least a year late.

The e-Borders programme, which had been one of the largest Home Office capital projects, was formally ended last March and its functions merged into a broader border project.

Pinsent Masons, the law firm acting for the Home Office, said the judge had ruled there had been a “serious irregularity” in the original arbitration tribunal because it had failed to deal with all the issues that were put to it.

The judge ruled that the Home Office complaints were “at the more serious end of the spectrum of seriousness” and that the tribunal “failed to apply its mind to a very large amount of evidence before it” even though it took 16 months to reach a decision after hearing the evidence in the case.

The Home Office said it was pleased with the judgment handed down by the court on Tuesday. It said: “However, the legal process is ongoing and it would be inappropriate for us to comment further at this time.”

Raytheon said: “RSL (Raytheon) is determined to pursue an appeal of this decision, to enforce the tribunal’s award and to recover the sums due to RSL for wrongful termination of the e-Borders contract.”

Keith Vaz, the chairman of the Commons home affairs select committee, said: “This is another twist in a saga that has cost the British taxpayer millions of pounds. We still do not have an e-Borders programme, nor do we have information that can help us determine what went wrong with the Raytheon contract.”

He said the costly procurement was a lesson to the Home Office, which should ensure that all of its contracts were properly benchmarked before they were awarded.