Raytheon and the Home Office are in talks as the department tries to stop the company suing for unfair breach of contract over its sacking from the e-borders programme last year.
At the time, the e-borders agency said it had no confidence in the company. Immigration minister Damian 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."
Raytheon's chief executive wrote a letter to the Home Affairs Select Committee which was leaked to the Telegraph.
The letter claimed that: "Purported termination was unlawful and that Raytheon is entitled to recover substantial damages for wrongful termination... We have made counterclaims in the arbitration in excess of £500m in respect of these matters."
The paper reckoned the committee would publish the letter later today, but a spokeswoman for the group said it was not sitting in Parliament and therefore not releasing anything today. We're waiting to hear back from committee chairman Keith Vaz.
A spokesman for Raytheon told the Reg: "We properly and legitimately responded to a request for information from a senior Parliamentary committee. We're not aware of how this letter was disclosed. However given that we are, as the report correctly states, in the midst of arbitration which is confidential, it would therefore not be appropriate to comment further."
The Home Office confirmed talks were ongoing.
Raytheon was hired to act as systems integrator and overall project manager for the £1.2bn deal. Its sacking by the Home Office led to fears that the other providers including Serco, Detica, Accenture and QinetiQ would also see contracts disappear.
In 2010 to 2011, the system checked details of 126 million passengers against watchlists and made 2,800 arrests. This number included 18 people arrested in connection with murders, 27 nabbed in connection with rapes, 29 arrested in connection with sex offences and the arrest of 25 people accused of violent crimes.
The contract suffered the usual government IT programme failures as well as concerns from European regulators that compulsory checks on all journeys could be illegal under privacy and data protection laws.
Questions were also raised on its decision to use biometric technology rather than people to secure borders.
Damian Green was a vocal opponent of the deal when in opposition. ®