'Govt should consider continuing BNS LCS contract with conditions'

 

The Governance, Procurement and Finance Investigation Committee has proposed that the government should consider the continuation of the Boustead Naval Shipyard Sdn Bhd (BNS) contract to supply the littoral combat ships (LCS) - but with conditions.

The committee said this included the immediately finalised equipment changes, namely the Integrated Platform Management System (IPMS) and Decoy Launching System (DLS), adding that BNS and the Royal Malaysian Navy’s LCS project team should also apply for a revised implementation schedule.

Apart from that, the committee said BNS should immediately complete and finalise the detailed design and the Defence Ministry should grant the extension period in writing to BNS, in addition to urging the government to exercise stringent control on progress payments to the company.

“This is to avoid payments being made to other parties that are not related to the LCS construction project. Liquidated damages (LD) must be enforced against BNS, as stipulated in the contract for the delivery of each ship.

“The government should not consider any LD exceptions against the company. Previous losses incurred by the government in the construction of six patrol vessels with the same company should serve as a lesson,” it said.

The committee said other issues may arise if a new contractor is appointed, as new negotiations would take a long time and costs may increase, adding that appointing a new contractor cannot guarantee that it can benefit the government.

The committee is also of the opinion that the remaining financial allocation of RM3.19 billion out of the total RM9.13 billion will not cover the project completion as less than 40 percent of the six ships have been completed.

However, it proposed that the Defence Ministry immediately table the findings of the investigation, the financial implications and the direction of the project to the cabinet so that it can decide on the best course of action for the six LCS.

- Bernama