Its minister, Mohamad Hasan, said the sixth supplemental contract, signed with Boustead Naval Shipyard Sdn Bhd (BNS) on May 26, includes specific “checkpoints” that must be met to gauge the project’s viability.
“These checkpoints serve as the ‘threshold’ overseen by the government, providing clear guidelines for the government’s prerogative to terminate the project,” he told the Dewan Rakyat in his winding-up speech of the 12th Malaysia Plan mid-term review.
“One example of these checkpoints is the completion of the detailed design by BNS.”
Mohamad, also known as Tok Mat, said 94% of the detailed design had already been completed, with the remaining 6% being worked on by BNS.
This includes primarily the non-critical zones on the ship, such as the area above the water surface.
“For your information, negotiations with the Design Authority, Naval Group France, for the Detailed Design contract, and Naval Group Malaysia, for the Technical Assistance and Support contract, have also been concluded,” he said.
Mohamad, was responding to Ikmal Hisham Abdul Aziz’s (PN-Tanah Merah) suggestion last week for the government to set a failure threshold for the project.
Ikmal was questioning the project’s viability, claiming that it had not shown any substantial progress.
On May 26, it was announced that the total cost of the LCS project had been revised to RM11.2 billion, up from RM9 billion previously.
The LCS project, said to be the largest defence procurement in Malaysia’s history, came under intense scrutiny last year after the Public Accounts Committee revealed that not a single ship had been completed although Putrajaya had already paid RM6.08 billion to BNS.
Three months before the budget increase was announced, Mohamad said the project’s cost would remain unchanged although the navy would only receive five frigates instead of the original six.
In his winding-up speech, Mohamad also said the increase in budget was primarily due to changes in the specifications of key systems, namely the surface-to-surface missile system (SSM), decoy launching system (DLS), and integrated platform management system (IPMS).
“Despite reducing the number of ships to five, this cost increase was unavoidable as it represents non-recurring costs for the construction of the entire ship,” he said.
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