8. In July 1998 the Department chose ICL as the preferred bidder for the Libra project despite being aware of problems ICL was having at the time with another government IT project (the Benefits Payment Card project). ICL had been unable to deliver on this project and had suggested that if the project were to continue it would either have to increase its prices by 30% or extend the contract by five years. In May 1999 the Benefits Payment Card project was cancelled. The Government chose not to claim damages as part of an agreement with ICL in which the company also agreed not to counter-claim.8
9. Before signing the Libra contract in 1998, the Department had examined ICL's contract with the Benefits Agency and the Post Office. The Department was told that there were problems but was satisfied that they did not represent a financial risk to the company. It believed that the problems were of a different nature to those that ICL would have to solve under the less complex Libra contract. The fact that ICL was having problems on one contract, which the Department thought was different, did not seem to be sufficient reason for not going ahead.9
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8 C&AG's Report, para 2.13 and Figure 9
9 Qq 32, 71-73, 130-131