THE Ministry of Defence has defended its decision to cancel a five-year lease agreement involving four American-made UH-60A Blackhawk helicopters, stating the government had “clear grounds” for the termination due to the supplier’s failure to deliver.
Defence Minister Datuk Seri Mohamed Khaled Nordin said the cancellation was not arbitrary, but a result of repeated failure by Aerotree Defence and Services Sdn Bhd to fulfil contractual obligations, even after being granted an extension.
“We awarded them the contract to supply helicopters, but within the stipulated time, they were unable to deliver. An extension was given, but still, there was no delivery. So the government cancelled it,” Khaled said during a press conference after a working visit to Kem Lok Kawi on Saturday.
“This is not a case where we awarded the contract, received the helicopters, and then cancelled. The helicopters never arrived. That’s the fundamental difference.”
On the question of legal recourse, Khaled declined to elaborate on the ministry’s next steps in light of Aerotree’s lawsuit, which is seeking RM353 million in compensation from the government.
“I cannot offer a detailed explanation of what actions we will take, because if I do, Aerotree will know our plans,” he said. “But what’s important is that the government had valid reasons for the cancellation.”
The dispute came to public attention after Aerotree filed the suit last Friday through legal firm Hafarizam, Wan Aisha & Mubarak at the Kuala Lumpur High Court. The company also named the Ministry of Defence and its Secretary-General as defendants.
In the suit, Aerotree is seeking a court order compelling the government to honour the agreement, based on a letter of award dated 17 April 2023. Failing that, the company is claiming special damages of RM17.5 million, additional damages of RM38.7 million, and compensation amounting to USD38.7 million (RM297.3 million), alongside general and exemplary damages.
The case has stirred fresh scrutiny over defence procurement processes in Malaysia, with critics urging greater transparency in the awarding and cancellation of high-value military contracts. - September 21, 2025
