Data center firm Iron Mountain is suing the UK Home Office, claiming it was forced to withdraw from bidding for a £140m ($188.73m) government passport office contract following what it alleges was an “unlawful” increase in penalty charges relating to the tender.

Legal papers filed in London’s High Court by Iron Mountain (UK) plc say the company was selected to participate in the procurement in September 2025 after expressing interest in the contract, which was advertised on the government’s tender platform in June that year.

The contract covers document management services for HM Passport Office (HMPO), which is running the procurement as part of the Home Office. It is estimated to be worth £140m, excluding VAT, and is expected to run from November 2026 to November 2030, with a possible three-year extension.

Tender documents issued by the Home Office in February 2026 required suppliers to submit their bids by March 27, although the department subsequently extended the deadline twice to June 5 and June 10, Iron Mountain said.

The documents included a draft contract carrying “service credits” that the winning supplier would have to pay if failing to meet key performance indicators (KPIs).

But two weeks before the final deadline, the Home Office issued a revised draft that sharply increased the service credits, according to the particulars of claim signed by Iron Mountain UK’s CEO, Bernadette Wightman, on September 2.

The company said that the monthly penalty rose from £250 ($337) to £20,000 ($26,961) for theft, loss or accidental damage of submitted documents plus £1,000 ($1,348) for every item stolen, lost or damaged.

Fines for processing submissions on time increased from £8 ($10.78) to £10,000 ($13,480), plus further charges for each late item escalating daily until resolved, it added. A cap on total service credit deductions was also switched from applying annually to monthly.

Iron Mountain wrote to the department saying the change constituted a “critical commercial barrier” and a “sudden, material shift in the commercial risk profile [of the draft contract]”.

The company asked for a two-week deadline extension “to enable a full review of the schedules and risk position ahead of suppliers re-convening governance” and warned that “unless remedial action is taken by the authority,” it would be unable to secure the internal governance approvals required to submit a bid by June 10.

Iron Mountain said the Home Office refused, noting that original penalty levels had been “manifestly disproportionate to the nature, scale and value of the services” and “plainly inadequate,” and that its revisions were “corrective and clarificatory in nature.”

It added that internal approval processes “are a matter for each bidder” and did not indicate “any deficiency in the procurement design or documentation,” Iron Mountain’s filings said.

Iron Mountain alleges the increases were unlawful under the Procurement Act 2023 and argues the law does not permit modifications after the deadline for requests to participate has passed, and that the change was “substantial.”

As a result of the alleged refusal to extend its deadline, Iron Mountain says it was required to withdraw from the procurement, losing the chance to compete for the contract.

The company wrote again on July 2 demanding disclosure of the documents behind the department’s decisions, but says the Home Office refused, telling it only that “numerous bidders have progressed to the moderation stage.”

DCD understands that the procurement remains ongoing and a winning bidder is expected to be announced in October.

Iron Mountain is asking the court to set aside the changes to the draft contract, reinstate it in the procurement, and order the Home Office to grant a fair and reasonable extension so it can submit a tender.

Alternatively, the company seeks damages for its lost chance of winning the contract and wasted tender costs, with the claim anticipated to be worth more than £10 million ($13.5m).

The Home Office has not yet filed a defense. Neither the department nor Iron Mountain responded to requests for comment.

DCD understands that Iron Mountain has delivered the current services as a subcontracted delivery partner of Sopra Steria. The Home Office awarded the French IT firm a contract in May 2020 to operate scanning, validation and storage services as part of HM Passport Office’s (HMPO) digital transformation. The contract was valued at £64.5 million ($86.95m) for an eight-year period, split into five, two and one-year terms.

It is believed that Sopra Steria hasn’t submitted a tender for the new services contract. A 2023 investigation by the Public Accounts Committee, Parliament’s spending watchdog, found that Sopra Steria “did not achieve its service level targets for five months in 2022,” when 360,000 passport applicants waited longer than the advertised ten weeks for their documents, and HMPO acknowledged that the contractor’s “performance caused concerns for customers.”

Sopra Steria declined to comment.

Iron Mountain operates data centers in more than 30 locations around the world. According to its website, it has a power bank of 1.4GW.

In the UK, it has two data centers in the Slough area: the 8.75MW LON-1 site, and LON-3, a 25MW data center scheduled to open this year. The company announced a third facility in Slough, LON-2, in 2021, but this appears to no longer feature on its website.