2.22 In October 1999, some ten months after contract signature, ICL formally requested the Department to renegotiate the Libra contract on the grounds that ICL's cash flow forecasts showed a £39 million deficit over the life of the deal. ICL said that it would be unable to continue with Libra if this gap could not be closed. It wanted the negotiations to be concluded by 21 March 2000 as it would otherwise have had to declare a loss in its 1999-2000 accounts. It needed therefore to make a decision on whether to walk away by that date.
2.23 The potential cost to ICL for walking away was lower than the loss it was forecasting. The agreed limits of liability within the contract grew by £5 million for every six months the contract was in existence. At this point ICL could have walked away with a maximum liability of only £10 million. ICL's withdrawal would have forced the Department to find another supplier and this would probably have resulted in substantial delay and associated costs to the Department which the contractual liability would not have covered.