The Home Affairs Committee has branded the government's e-Borders programme a 'huge disappointment' in a report on the Home Office's measures to deliver cost savings.
The committee is mostly concerned about the progress of the programme, which began in 2003 and has now been undertaken by successive governments.
E-Borders will enable the government to track almost all non-European Union nationals arriving in the UK and check passengers against security watch-lists.
It was revealed recently that although airline passenger checks will be implemented in time for the Olympic Games this summer, this will not yet include shipping or rail passengers.
"The e-Borders programme, which has resulted in the loss of millions of pounds of taxpayers' money, highlights the need for procurement to be carried out correctly and to include clear goals for private sector companies," said MP Keith Vaz, chairman of the committee.
"It remains a huge disappointment that e-Borders is not fully in place in time for the Olympics."
The UK Border Agency experienced a number of IT headaches related to the original £1.2 billion e-borders programme. Last summer, the Agency was said to be locked into a binding arbitration process with supplier Raytheon after the company was sacked from the programme in July 2010. Up until being removed from the e-borders contract, Raytheon had been paid £188 million out of its £742 million contract.
IBM and Serco were selected to replace Raytheon to implement the airline systems in time for the Olympic Games, but the contract for rail and shipping, which the report states will be a much more significant undertaking, has not yet been awarded.
The report reads: "The letting of the post-Olympics part of the contract will be a crucial determinant in its overall success or failure."
Immigration Minister Damian Green recently defended the e-Borders progamme by saying that it would be "genuinely secure, fluid and complete". Border security "is about making sure that we are in the right place, at the right time, with the right information to stop the source of the threat before it even reaches our shores," he said.