2.2 In January 1992 the Home Office appointed Price Waterhouse to develop a national system. In August 1992, after responsibility for the magistrates' courts service had passed to the Lord Chancellor's Department, the contract with Price Waterhouse was terminated on the grounds that the firm's work was sub-standard and it had not delivered as expected under the contract. The Department initiated action for breach of contract claiming £5 million for payments made under the contract and compensation for other related losses. In May 1995, the Department accepted Price Waterhouse's offer of £1.375 million in full settlement.