LCS project: Cost increase due to construction period, specification changes - Adly

KUALA LUMPUR - The construction period and the specification changes were the main factors which caused the littoral combat ship (LCS) construction project to increase to up to RM11.2 billion.

Deputy Defence Minister Adly Zahari said according to the Sixth Supplementary Contract (SA6) signed recently, an additional 83 months was required to complete the project.

"When we agreed to continue this LCS project, definitely there will be a time period. If we look at the original agreement, the first LCS ship should have been completed in 2019. So, the 83-month increase comes at a cost.

"Among the biggest cost additions involve changes to the specifications based on the Royal Malaysian Navy (RMN) requirements. The government approved the specifications for the Surface-to-Surface Missile System, Decoy Launching System (DLS) and several other systems," he said during the question and answer session in the Dewan Rakyat today.

He said this in response to a question from Datuk Seri Ikmal Hisham Abdul Aziz (PN-Tanah Merah) regarding the timeline of the LCS project being restarted and whether it could be completed as originally planned for RMN use in 2026.

Adly said the specification changes were a national defence requirement, while SA6 which was signed on May 26 was the starting date for the LCS reconstruction.

He said, based on the milestone plan contained in the supplementary agreement, the construction of the first LCS vessel could be completed in November 2024, before going through several evaluations by the RMN.

As such, he said the first LCS ship is expected to be commissioned by yearend in 2026.

In addition, Adly said the improvements made in SA6 also included that the government could continue to pay the original equipment manufacturers (OEMs) through the Ministry of Finance without going middlemen.

According to him to ensure that the project could be completed, four monitoring committees have been formed, adding that the payment model was also improved from milestone to progress payment.

Commenting on the latest status of the settlement of international agreements involving the companies Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED), Adly said the transactions do not involve the government.

"The government does not need to bear any responsibility because the agreement is a company business matter not related to the government's contract," he said. - BERNAMA