KUALA LUMPUR: The Defence Ministry has acknowledged delays in the delivery of 68 Gempita armoured vehicles and two other vehicles by a company from 2020 to 2023, says Deputy Defence Minister Adly Zahari.
He said the ministry issued a late penalty notice of RM162.75mil on January 15.
In response, the company - Deftech - appealed for the penalty to be waived, citing force majeure due to the pandemic and the Russia-Ukraine conflict.
"The appeal was discussed in a Contract Coordination Panel meeting on May 6, resulting in the company being fined RM162.75mil.
"An execution bond of RM53.9mil will be seized, and the remaining penalty will be settled through current contracts or separate collections," he said when wrapping up his ministerial replies during the debate on the Auditor-General's Report in Dewan Rakyat on Wednesday (July 23).
This was the first time the A-G Report was tabled for debate.
Adly also said the company is required to pay, with two methods outlined by the coordination panel.
"On June 25, a directive was issued to banks to seize RM53.9mil, with the remaining RM108mil to be offset through other contracts with Mindef.
"The Gempita vehicles, initially due in 2017, received an extension until 2022, and the penalty system could be improved in procurement processes.
"Mindef acknowledged weaknesses in contract terms and is developing a monitoring system for better oversight," he added.
Previously, it was reported that weaknesses were identified in the procurement of the army’s armoured vehicle fleet, including a two-year delay in issuing late delivery penalty claims.
The Auditor-General's Department found that the weaknesses included uncollected late delivery penalties amounting to RM162.75mil under the Gempita armoured vehicle supply contract, unimposed late service penalties amounting to RM1.42mil under the maintenance, repair, and spare parts supply contract, as well as procurements totalling RM107.54mil executed through contract splitting.
The Auditor-General also found delivery delays ranging between six and 1,048 days for 70 vehicles.
