UK manufacturer De La Rue has said it is preparing to take the UK government to court over plans to offer the contract to produce blue British passports to a Franco-Dutch firm.

The company’s current contract, which ends in July 2019, is worth £400m. A De La Rue spokeswoman confirmed the company was taking legal action.

“Based on our knowledge of the market, it’s our view that ours was the highest quality and technically most secure bid. We can accept that we weren’t the cheapest, even if our tender represented a significant discount on the current price.”

In a statement, the company also raised questions over the cost of the winning bid, which De La Rue claimed was “well below our cost price”. 

″(This) causes us to question how sustainable it is. In the light of this, we are confident that we remain the best and securest option in the national interest.”

De La Rue’s appeal was first reported by the Financial Times on Monday.

When the new company, called Gemalto, was awarded the making contract, the decision was roundly criticised, particularly by the Daily Mail newspaper which has led an extended campaign against the decision, organising a petition which has gained more than 227,000 signatures. 

On Sunday, the Home Office extended the original deadline for legal challenges to the decision to April 17, as De La Rue reportedly sought further information from the ministry on its decision-making process.

De La Rue executives suggest that Gemalto is in a favourable position simply because it has undercut its competitors, the FT reported.

The news produced awkward headlines for Prime Minster Theresa May, who announced in December that Britain, which adopted burgundy passports in 1988 in line with EU recommendations, would switch back to the “iconic” dark blue it had used for decades.