How does Mindef justify the RM571.9m payment to the NSM supplier?

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Mindef Justifies RM571.9 Million Payment as Contractually Compliant for Naval Strike Missiles

The Ministry of Defence (Mindef) has stated that the RM571.9 million payment to the Norwegian supplier of the Naval Strike Missile (NSM) anti-ship missile system for the Littoral Combat Ship (LCS) project was made in accordance with the contract's progress. At the time of the payment, all NSM systems had been fully manufactured, successfully passed testing by the Royal Malaysian Navy (RMN), and were ready for delivery, indicating that the funds were disbursed based on completed milestones and delivered goods, not as an advance.
Payment Aligned with Contractual Progress and System Readiness

Mindef clarified that the RM571.9 million disbursement was not an advance payment but rather a remittance made following the completion of manufacturing and testing stages for the NSM systems. The ministry emphasised that by the time the payment was effected, the procured missile systems had already undergone and passed all required tests conducted by the RMN and were in a state of readiness for handover to Malaysia. This sequence of events supports the claim that the payment adhered to the agreed-upon contractual terms tied to tangible progress.
Contractual Safeguards in Place for Government Interests

Contrary to claims that the procurement contract lacked protective clauses, Mindef affirmed that the agreement contains provisions empowering the government to take action against non-performance or breaches of contractual obligations. This indicates that the contract includes mechanisms designed to safeguard Malaysia's interests, allowing for recourse should the supplier fail to meet its commitments. In light of the Norwegian government's revocation of the export license, which was beyond the control of both parties, Mindef is actively invoking these contractual provisions to protect government funds and pursue claims for recovery of the payment and any associated damages.
No Impact on Armed Forces' Operational Readiness or LCS Schedule

Mindef has stressed that the current situation concerning the NSM procurement has not adversely affected the operational readiness of the Malaysian Armed Forces. The RMN possesses existing assets and weapon systems that enable it to continue fulfilling its responsibilities in defending the nation's maritime sovereignty. Furthermore, the revocation of the export license has not led to any alterations in the delivery schedule for the LCS vessels. Concurrently, the RMN is undertaking an evaluation and assessment of alternative missile systems that could potentially serve as replacements for the NSM.

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How does Mindef justify the RM571.9m payment to the NSM supplier?

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