Home Office ordered to pay Clifford Chance client Raytheon £224m

Clifford Chance client US defence company Raytheon Systems has won over £224m from the Home Office after an arbitration tribunal ruled the Government unlawfully terminated its e-borders contract in 2010.

The tribunal awarded Raytheon £50m in damages for ending the contract, £9.6m to settle complaints relating to changes to the original contract and £126m in assets acquired through the contract. It also awarded interest of £38m to Raytheon.

Clifford Chance partner Rob Lambert advised Raytheon in bringing the £500m claim against the Government in 2011.

Pinsent Masons outsourcing partners David Isaac and Simon Colvin scored the lead role for the Home Office and worked on the contract negotiations for the 10-year outsourcing deal. The firm is understood to have retained its role for the Government on the litigation. 

The e-borders project was set up by the Labour Government to monitor the number of people coming in and out of the UK. Raytheon was awarded the £750m contract in 2007 but was kicked off the project in 2010 when the Government said it had no confidence in the company.

The termination cost the taxpayer £259.3m including £195m in supplier costs.

But Raytheon hit back, arguing that the termination was unlawful and seeking damages for wrongful termination.  

The tribunal did not rule that Raytheon had failed to meet its contractual obligations but criticised the UK Border Agency for failing to properly brief Home Secretary Theresa May on whether the company had a good case to keep the contract.

Today May said in a letter to Home Office Committee chairman Keith Vaz: “The Government stands by the decision to end the e-Borders contract with Raytheon. This decision was, and remains, the most appropriate action to address the well-documented issues with the delivery and management of the programme.

“All other alternatives available to the Government would have led to greater costs than the result of this tribunal ruling. Continuing with the contract and trying to rectify the deep rooted problems was estimated at the time as likely to cost £97 million more than terminating it, even with today’s settlement.”