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Raytheon kicked out by the Home Office as austerity regime gets tough

Posted by admin on Mon, 26/07/2010 - 08:43
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If anyone still doubts the 'value for money' mentality rolling through Whitehall, it's unlikely to be the management team at Raytheon Systems. Last week the US-headquartered contractor was shown the door from the e-Borders programme with strong words from the immigration minister making it clear that the decision was down to “breach of contract”.

Immigration minister Damian Green said Raytheon's progress had been "extremely disappointing” and the firm had been in breach of contract since last July. Green pulled no punches in his dismissal of Raytheon. “The Home Secretary has no confidence in the prime supplier of the e-borders contract, which since July 2009 has been in breach of contract,” he said. “It has been clear for some time that the way the existing programme was developing gave rise to serious concern. Over recent weeks we have been examining progress and it has been extremely disappointing.
 
"Elements had not arrived on time, the next critical parts were running 12 months late, with the risk of further delays, and there is no confidence in the current prime supplier – Raytheon Systems Limited – to be able to address this situation.”
 
The scheme - set up by former Home Secretary Jacqui Smith in 2007 -  is intended to give border officials early access to electronic passenger details of all people coming into the UK, which could be checked against police, security and immigration watch lists. 
 
It appears that the  e-Borders project was singled out for early attention by the cross-government Efficiency and Reform Group” headed by Francis Maude at the Cabinet Office and Danny Alexander, chief secretary to the Treasury, after growing concern that the programme was a year behind schedule. The Labour  government had claimed 95% of UK passenger movements would be covered by e-borders by the end of this year, a target that will be significantly missed. 
 
Entry denied
 
Raytheon was leading a consortium of companies working on the project, which is to provide technology allowing UK border control officials to collect and analyse passenger and crew data, provided by all air, rail and sea carriers, of journeys to and from the U.K. in advance of travel.
 
As prime contractor, Raytheon's role in the contract was systems integration, travel services and overall project management. Others in the consortium were Serco Group , Accenture, Detica Group,  QinetiQ Group, Capgemini and Groupe Steria. 
 
The UK government has paid suppliers on the contract £188 million since it was awarded in 2007, out of a total contract cost of £750 million. Green said: “The government is determined to get value for money from its major contracts and requires the highest standard of performance from its suppliers.”
 
Green said the government owns software for the collection of data in advance of travel and its subsequent storage, the technology to enable carriers to feed information to a central data hub and a National Border Targeting Centre where this information is checked and reviewed; he also said that the system should " continue to run as normal".
 
The Home Office has stated that no penalty fees would be paid for removing Raytheon because the contract was “terminated for cause”, including late delivery of important milestones such as a National Border Targeting Centre.
 
But Raytheon seems unlikely to take all this lying down, confirming that it will  be seeking talks with the UK government as soon as possible. "We expect to review this matter with the Home Office at the earliest opportunity to address the path forward," Raytheon said in a statement. "We have delivered a live operating capability that now screens more than 120 million journeys per year, representing more than half of the traffic entering and leaving the country."
 
The firm also appeared to drop a major hint that its position will be that cost cutting in the austerity regime is behind the decision.  It said: "We appreciate the Home Office is operating under significant budget constraints but a default notice is not an appropriate way to achieve the important objectives of this program."
 
A new way of doing?
 
The e-Borders programme itself will continue. Green made it clear in a Commons statement that he supports the concept of electronically collecting and checking incoming passenger details against UK watch lists, arguing that: "This is a key element of our strategy to deliver robust border controls and it supports our national counter-terrorism strategy."
 
"We need to know who is coming to the country and who has left so that we are able to stop those who are not allowed to come here. A working e-Borders programme will help us perform all those vital tasks,” he added.  "That is why we have taken this decision, and why we will ensure that the benefits of e-Borders are delivered through a programme that meets its targets, so that everyone in this country is made safer."
 
None of the other partners in the consortium were named as being at fault by the Home Office decision, although as their contracts were dependent on Raytheon's as prime contractor these will have to be re-signed. Green confirmed: “We will now be seeking alternative providers to continue to deliver this project as a matter of urgency."
 
A spokesman for Serco, which is responsible for the infrastructure and service management of the contract,said the firm wanted to be part of any future arrangements.  "It's important to make clear that Serco's delivered all of its commitments under its sub-contract and the government has made clear that e-borders remains a priority, the termination of this contract does not change this."
 
A new prime contractor will be appointed. It was speculated in Whitehall that BT – which lost out in the original bidding for the contract – may pitch itself as a replacement for Raytheon. 
 
But whoever ends up taking on the e-Borders programme will do so with a clear message ringing in their ears: the Coalition Government is not in a mood to pay out for project over-runs and delays and appears ready to hold suppliers to account. That's a message that will undoubtedly be heard throughout the public sector as a whole.