Germany’s defense ministry denied reports it has decided to replace Dutch shipmaker Damen Shipyards on one of its biggest military procurement projects, although the multibillion-euro warship order remains under close scrutiny amid delivery delays. 

Damen Naval’s €9 billion ($10.55 billion) contract to design and manufacture six F126 frigates for Germany is facing “massive delays,” a spokesman for the German defense ministry said during a regular government news conference in Berlin on October 2. He confirmed that no decision had been made to replace Damen, and said the defense ministry is assessing how to proceed. The delays are expected to last years, they added. 

The comments came after reports in German media suggested the government planned to replace the Netherlands’ largest shipbuilder with German firm NVL BV & Co. KG over the delays. German lawmakers recently froze a €671 million payment to Damen for six F126 ships after the company missed a key delivery milestone. 

The delays put Germany in a bind just as European nations pour billions into bolstering their military capability in the face of an increasingly aggressive Russia. The German defense ministry spokesperson stressed that the country’s anti-submarine warfare capabilities remain intact regardless. 

Damen Shipyards Group NV, Damen Naval’s parent company, is being prosecuted in the Netherlands over corruption and sanctions violations, and the Dutch parliament had to step in with a €270 million bridging loan to alleviate the company’s acute cash shortage in July after the German payments were frozen.

“It is absolutely untrue that Damen has lost the contract for the construction of the German frigates,” a spokesperson for Damen told Bloomberg. “Constructive discussions are under way with the German government regarding the further progress of the project.”