A-G's Report: Defence Ministry did not impose claims or late charges of RM116.54mil to company supposed to deliver its ship

PETALING JAYA: The Defence Ministry failed to impose liquidated damages or late charges of RM116.54mil on the company that was supposed to deliver the littoral combat ship (LCS) 1, said the 2019 Auditor-General’s report.

At the same time, the report found that the advanced payment made for the ship exceeded the actual work progress by 21.1%.

The report said that the company was supposed to deliver the LCS 1 on April 2019, but as of Dec 31,2019 or 245 days later, it had yet to be delivered.

The report added that as of June 30 this year, although the scheduled delivery of the ship had exceeded 12 months, the ministry had not issued a letter to the company demanding late charge penalty but had merely issued a reminder to the company on the delay.

The RM9bil contract for the delivery of six ships was from Oct 2013 to Oct 2023.

The report said that according to the contract, the ships were to be delivered in stages from April 2019 to June 2023.

In response, the ministry said that as of June 10 or 435 days after the delivery of LCS1, the late payment charges stood at RM217.5mil.

It said it had issued a notice of claim of RM180mil to the company because of a capping on the claim.

They added that as of July 1, the status of the progress of the LCS was 56.7% compared to the planned 85.7% - a delay of 29.1% or 31 months.

The report said that as of Dec 31, advanced payments of RM910mil or 63.8% of progress payments have been made, although it was only at 42.7%.

The report also found that late payment charges of RM15.04mil were not imposed on the company that was to supply 24 Lightweight Multiple Launcher - New Generation (LML-NG) between June 2018-September 2018.

The audit found that 20 of the 24 launchers were delivered between 28 –171 days late.

The ministry said it will act on the matter after getting a response from its legal department.

The A-G report also highlighted that nine armoured personnel carriers (APC) purchased by the ministry did not meet the specifications of the United Nations (UN), as they were unarmed.

The APCs, which were used in a UN peace mission in Lebanon, were first purchased by the Malaysian government, with the UN to reimburse the government.

Because the vehicles were not equipped with the Remote Control Weapons Station, the government lost out on RM2.2mil in reimbursements.

The ministry said that the APCs passed the Final Acceptance Test and could be used for the United Nations Interim Force in Lebanon (UNIFIL) and that the non-specifications were only from the weapons systems.