UPDATE 2-UK ends Raytheon border contract

* UK interior minister has ‘no confidence’ in Raytheon

* Minister says key parts of contract 12 mths late

* Value of contract at 755 mln stg, spent 188 mln so far

* Serco, QinetiQ, BAE Systems, Accenture also in consortium

* UK’s Serco says fulfilled all its commitments on contract

(Adds Serco, analyst comment, background, share price)

By Lorraine Turner and Golnar Motevalli

LONDON, July 22 (BestGrowthStock) – The UK government ended its 750
million pound ($1.14 billion) border security contract with a
Raytheon-led (RTN.N: ) consortium and said it had no confidence in
the U.S. company.

The Home Office said in a statement on its website on
Thursday, that Raytheon, which provided technology to carry out
security checks on travellers, had been in breach of the
e-Borders contract since July 2009.

“The Home Secretary has no confidence in the prime supplier
of the e-Borders contract,” Minister of State for Immigration
Damian Green was quoted as saying.

“With critical parts of the programme already running at
least 12 months late, we have taken the decision to terminate
the e-Borders contract with them.”

The cancellation comes as the UK undertakes widespread
austerity measures to deal with a budget deficit running at
about 11 percent of national output. [ID:nLDE663030]

But the UK government, which has spent 188 million pounds on
the contract to date, said it will seek alternative providers
for the project.

“They’re still committed to the programme, albeit not the
current providers, it’s more about one supplier not doing what
they were contracted to do, rather than the government being
tougher,” said Will Shirley at Liberum Capital.

The contract was awarded in November 2007 to a consortium of
companies including Serco (SRP.L: ) and Accenture (ACN.N: ), to
develop and implement the scheme to collect and check passenger
details against police, security and immigration watch lists.

Representatives at Raytheon’s UK office were not immediately
available for comment.

Massachusetts-based Raytheon, a maker of missiles and radar
systems, which has contracts with the U.S. government’s
Department of Homeland Security, also built the technology for
Apollo 11, the first manned mission to land on the moon in 1969.

Other members of the Trusted Borders Consortium, which beat
a BT-led (BT.L: ) group to the contract in 2007, include Detica
(BAES.L: ) and QinetiQ (QQ.L: ), Steria and Capgemini.

A spokesman at UK’s Serco, which runs prisons and transport
systems, said it had fulfilled all its commitments on the
contract.

“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.”

Serco, which was responsible for the infrastructure and
service management of the contract, would like to be part of
future arrangements, said the spokesman.

The contract is worth 20 million pounds a year to Serco, or
less than 1 percent of its revenue, added Shirley.

Shares in Serco shares were up 2.59 percent by 1325 GMT,
while shares in Qinetiq were up 2.07 percent.

Stock Market Investing

(Additional reporting by Victoria Bryan, Paul Sandle; editing
by Paul Hoskins, Sharon Lindores)

($1=.6598 Pound)

UPDATE 2-UK ends Raytheon border contract