In its progress report on the LCS project issued today, the committee said that the AGC had informed the ministry that “further action” was required for supplementary contract 6 (SA6), adding that the agreement should have been submitted to the AGC before it was signed.
“The defence ministry’s decision to bypass the AGC in signing SA6 should not have happened as it could have legal implications for the government. This cannot be repeated,” the PAC said.
The SA6, which was signed by then defence ministry secretary-general Muez Abd Aziz and Boustead Holding Bhd chairman Nazim Rahman on May 26, detailed project deliverables and other issues in reviving the project.
In its report, the PAC noted that there had been no progress on the construction of the first LCS ship from December 2021 to June 10 this year.
“The main issue about the LCS’s detailed design has not yet been resolved.
“It is currently at a rate of 96% completion at the construction contractor level, with only 84% having gone through the confirmation, verification and approval stage by the Naval Group from France, as the LCS design supervisor,” it said.
“However, the construction contractor has assured (the defence ministry) that the detailed design will be completed before August 2024, as stipulated in SA6,” the report stated.
It also said that although the number of LCS was reduced from six to five, the cost of construction of the frigates had increased from RM9.128 billion to RM11.22 billion.
It said the RM2.09 billion increase resulted from the cost of design (RM0.211 billion), equipment (RM1.214 billion), insurance and risk (RM0.466 billion), financial costs (RM0.143 billion) and project management costs (RM0.066 billion).
“Delays and increased time are also the main factors for this increase to occur,” it said.
It was reported in January that the government decided to reduce the number of the ships from six to five since the construction and purchase of equipment for the sixth vessel had yet to begin.
The LCS project, said to be the largest defence procurement in Malaysia’s history, came under much scrutiny last year after the committee revealed that not a single ship had been completed although Putrajaya had already paid out RM6.08 billion for the project.
The PAC said the navy should have received five of the ships by August last year.
We are live on Telegram, subscribe here for breaking news and the latest announcements.