KUALA LUMPUR: The report on the controversial littoral combat ship (LCS) project by the Public Accounts Committee (PAC) revealed that the last of the five vessels will only be ready by the year 2029, thus causing more delay.
“The LCS construction period has been extended to 83 months and it is expected that the Malaysian Navy will only be able to obtain all five LCSs in 2029 compared to the original contract where LCS 5 was supposed to be delivered in 2022,” read the report, which was published on the official Parliament website on Monday (Oct 9).
On top of the delay, the report said that there has been no progress on the construction of the first ship between Dec 11, 2021, and June 10, 2023.
At the same time, the PAC said due to the delay, the cost of the LCS construction had ballooned up to RM11.22bil.
“Although the number of LCS was reduced to five, the cost of LCS construction increased from RM9.128bil to RM11.22bil with an increase of RM2.098bil resulting from the cost of design (RM0.211bil), the price of equipment (RM1.214bil), insurance and risk (RM0.466bil), financial costs (RM0.143bil), and project management costs (RM0.066bil).
“Delays and increased time are also the main factors for this increase to occur.”
Previously it was reported that the government decided to reduce the number of the LCS from six to five since the construction and purchase of equipment for the sixth vessel had yet to begin.
The PAC further said that the main issue of the LCS detailed design has yet to be resolved, which is currently at a rate of 96% completion, with only 84% having gone through the confirmation, verification and approval stage by the LCS design supervisor, Naval Group from France.
“However, the construction contractor assured that the detailed design must be completed before August 2024.”
According to the PAC, the sixth supplemental agreement (SA 6) signed on May 26 this year did not get the approval of the Attorney General’s Chamber.
“The department explained that it had informed the Defence Ministry (Mindef) that there was a need for further action for SA 6 and it should have been submitted back to the AGC before it was signed.
“Mindef's decision to turn its back on the AGC in signing SA 6 is an inappropriate action because it can lead to legal implications against the government and this (action) must not be repeated.”
Therefore, the PAC suggested Mindef to ensure the implementation of the mobilisation plan is in accordance with the conditions that have been set, such as the first LCS ship must be completed by May 2024 and handed over to the Navy by August 2026.
The PAC also told Mindef to ensure that the contractor would complete the detailed design including obtaining the approval from the Naval Group before August 2024 as stated in SA 6.
Also, the PAC suggested the government to ensure the acquisition of Boustead Naval Shipyard Sdn Bhd (BNS) by Ocean Sunshine Bhd would achieve the intended goal.
“Mindef and the Navy are responsible for ensuring that the entire construction project of five LCS worth RM11.22bil is completed and handed over to the Navy according to the agreed period and cost in SA 6.
“Ministries and government agencies must ensure that the draft contract negotiated with the company has been consulted and reviewed, and approved by the AGC first before signing.
“The Auditor-General’s Department needs to carry out an audit before LCS 1 is handed over to the Navy and presented in Parliament,” the report added.
Defence Minister Datuk Seri Mohamad Hasan expressed confidence that the construction of the five vessels will be done on track according to the new schedule, adding that the delay would not cause any significant issue.
“Building a ship is not easy, especially since this is concerning combat ships, which means there would be weapons installed on the vessels.
“Even a mere 0.01% error could cause a big problem. After the construction is completed, we have to do a harbour test which will take about six months and after that we need to go for an open sea test and that is another few months,” he said during a press conference at Parliament here Monday (Oct 9).
