The UK Border Agency is locked in a "binding arbitration" process with Raytheon after the IT supplier was sacked from the failing £1.2bn e-Borders immigration programme in July last year.
Up until being removed from the e-Borders contract Raytheon had been paid £188 million, out of its £742 million contract.
Under the arbitration process, an independent authority will set an agreement between the parties, which they will be obliged to adhere to. The process follows the government commencing litigation against the supplier, around payments, and is usually seen as an attempt to avoid being locked in court hearings for a much longer period of time.
Raytheon had been subject to performance related pay but the government had expressed strong dissatisfaction over its performance.
A Home Affairs Committee report published today said that in spite of Raytheon's removal the programme is still behind schedule and its future plan remains uncertain.
The report follows committee hearings in April, and the parties have not since commented on the latest status of the arbitration process or what is likely to be agreed.
"The e-Borders schemewhich has been the lynch-pin of successive Government's programmes for controlling the UK's borders is still running significantly behind timetable and the Agency is pursuing a claim against [Rayhteon] who was dismissed for contract breaches after being paid £188 million," the committee noted in its report.
In a hearing for the report, UK Border Agency chief executive Jonathan Sedgwick said the "poor performance" of Raytheon has "clearly been a setback to this programme".
When Raytheon was unceremoniously dropped from the programme a year ago, the government said it had "no confidence" in the supplier after an "extremely disappointing" performance. The move was seen as an early attempt by the new government to demonstrate it was acting 'tough' on IT suppliers, and preceded the scrapping of the troubled FireControl scheme with supplier EADS.
The e-Borders programme was launched in 2009, and was supposed to electronically collect and analyse information on all passengers entering or leaving the UK from carriers (including airlines, ferries and rail companies).
A number of IT, logistics and financial problems contributed to transport operators not adhering to the requirements laid down by the Agency and Raytheon.
But since Raytheon's removal the e-Borders programme has continued to fall behind schedule, including no data being collected for either ferries or trains.
The Home Office last year hired IBM to support the basic database and Serco to provide the Carrier Gateway - the interface between carriers and the Agency - and the National Border Targeting Centre (which provides the checking of passenger names and other details against watchlists).
The Committee points out though that these were existing services. The Home Office had yet to move onto the question of who was to provide new services, such as those needed for the London Olympic Games in 2012, said the Committee.
There are also "considerable concerns about whether the requirements for carriers to gather data on passengers entering the UK are compatible with the data protection laws of a number of EU member states", says the Committee report, something that was first raised three years ago.
The whole e-Borders programme is supposed to be in place by 2015, but the Committee says "it is difficult to see how the scheme could be applied to all rail and sea passengers within this timetable, given that even air passengers are not yet fully covered".
As well as the failings in IT systems, the Committee said the UK Border Agency was not dealing with immigration cases quick enough.
Keith Vaz MP, chairman of the Committee, said, "It is clear that the UK Border Agency is still not fit for purpose. There are serious concerns over the agency's ability to deal with cases and respond to intelligence swiftly and thoroughly."
The Committee intends to report again on the scheme's progress in July.