MINDEF Assessing Legal Action, Compensation Over Cancelled NSM Contract

KUALA LUMPUR, May 14 (Bernama) -- The Defence Ministry has established a special committee to assess legal action and the amount of compensation to be claimed following the cancellation of the Naval Strike Missile (NSM) procurement contract.

Defence Minister Datuk Seri Mohamed Khaled Nordin said the move was necessary as the government had already paid nearly 95 per cent of the contract value, amounting to more than RM500 million.

“A special committee at the ministry level has been set up to detail the claims, which involve not only the refund of the original payment but also compensation arising from the breach of contract,” he said.

Mohamed Khaled was speaking to reporters after launching the PROWIRA Ready-to-Work (RTW) Graduates Programme and the Armed Forces Fund Board Foundation (Yayasan LTAT) Education Initiative 2026 here today.

At the same time, Mohamed Khaled said the ministry was also evaluating several alternatives to replace the NSM system.

He said another committee has also been formed to study suitable replacement systems that can be supplied within a short timeframe.

However, he said the process was not straightforward as the missile system must be compatible with the ships’ existing communication, electrical and operational systems.

He said the integration process for the new system was expected to take several months.

Mohamed Khaled said the cancellation of the NSM supply would not affect the delivery schedule of the first Littoral Combat Ship (LCS), KD Maharajalela, to the Royal Malaysian Navy in December this year.

“The LCS programme will continue as planned, except that the vessel will not initially be equipped with a surface-to-surface missile system,” he said.

According to the Kongsberg Defence & Aerospace website, the NSM procurement contract was signed between the Royal Malaysian Navy and the company in April 2018, valued at 124 million euros (RM571.9 million), to equip six new LCS vessels.

-- BERNAMA