A-G’s Report: Mindef let over RM130m in late fees slide, paid firm ahead of schedule

The National Audit Department said the ministry was entitled to impose the late penalty charges against the company based on the agreement in the main contract, but did not. — Reuters pic
The National Audit Department said the ministry was entitled to impose the late penalty charges against the company based on the agreement in the main contract, but did not. — Reuters pic

KUALA LUMPUR, August 24 — The Defence Ministry failed to claim liquidated damages amounting to RM116.45 million from a company that was over eight months late in delivering a Littoral Combatant Ship (LCS 1) class vessel to the Royal Malaysian Navy, a federal audit revealed.

In the Auditor-General’s Report 2019 (Series One), the National Audit Department noted that the vessel was only delivered in April last year or 245 days behind schedule.

The department said the ministry was entitled to impose the late penalty charges against the company based on the agreement in the main contract, but did not.

“The audit also revealed that the progress payment amounting RM910 million or 63.8 per cent has been paid to the company, compared to the actual work progress of the LCS 1, which is only completed at 42.7 per cent.

“Payment for progress made on the LCS 1 is beyond the actual work progress project, which is 21.1 per cent. Actual work progress of the ship covers the construction, systems, weapons and ship preparation for sailing,” the report read.

The report also found the ministry failed to impose late penalty charges amounting RM15.04 million against another firm that delivered 20 units of Lightweigher Multiple Launcher — New Generation (LML-NG) missile launchers between 28 and 171 days late.

Another portion of the audit concluded that nine armoured personnel carriers (APC) purchased for the government failed to meet the United Nations’ specifications, resulting in a RM2.22 million shortfall in refunds received.

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