LCS project mobilisation slightly delayed, PAC found

The Public Accounts Committee (PAC) found that the implementation of the mobilisation plan for the Royal Malaysian Navy's (RMN) Littoral Combat Ship (LCS) Second Generation Patrol Vessel project, has not yet reached a significant level.

The finding was the result of a working visit of seven PAC members with Dewan Rakyat Speaker Johari Abdul, to the Boustead Naval Shipyard Sdn Bhd (BNS) on Oct 5, which aimed to review the progress of the LCS construction works being carried out.

According to a report published on the official PAC website, although the progress of the construction work has already started on the ground, there is a negative variance of 0.07 percent, or a delay of one month in terms of the overall progress of the project compared to what was expected from the original plan.

However, BNS and the RMN gave assurances that the delay would not affect the overall timeline for the delivery of LCS ships to the navy.

“Based on the monitoring carried out by the Defence Ministry (Mindef), RMN, and the Finance Ministry, PAC is of the view that it should be sufficient and to be a catalyst for this LCS project to be completed on time.

“This is because there are four types of committees that monitor the progress of the LCS project in addition to the PAC, namely the Technical Committee at the project team level, and the project management review (PMR), which is the project's technical team at the Mindef level,” said the report.

Apart from that, there is a Working Committee chaired by the Mindef deputy secretary-general (development) and the Project Monitoring Committee (PMC), jointly chaired by the Mindef secretary-general and the Treasury secretary-general.

PAC also concluded that the cost increase of RM2.098 billion, for the project had taken into account a total savings of RM450 million, following the reduction of ships from six to five.

At the same time, the PAC also found that the detailed design of the LCS is still at a rate of 96 percent completion at the construction contractor level, with only 84 percent having gone through the confirmation, verification and approval stage by France’s Naval Group (LCS design authority).

“The confirmation work from France’s Naval Group is pending due to the payment arrears issue, which has not been fully resolved. In addition, the repayment of arrears to the Original Equipment Manufacturer (OEM) will also be completed within six months after the Sixth Supplementary Contract (SA 6) is signed.

“For the purpose of improvement, PAC submitted five improvement recommendations, including that Mindef still needs to present a progress report on the LCS project every three months, until the LCS project is completed, including a progress report according to international project management standards,” the report stated.

It was also mentioned that Mindef needs to ensure the construction contractor completes the detailed design, including getting approval from the Naval Group before August 2024.

The payments to be made to the OEM and the relevant parties should coincide with those outlined in SA 6, to avoid construction delays.

The report also recommends that Mindef and RMN need to ensure that any funds are used prudently by prioritising the need to complete LCS and not be wasteful.

PAC also proposed that the Finance Ministry plays a more proactive role in ensuring that there is no waste of the people's money in the LCS construction project.

A detailed report on the progress of the LCS project can be downloaded from the PAC website.

Previously, the construction of the LCS ships was embroiled in controversy when PAC revealed that not a single ship had been completed, even though the government had spent RM6.08 billion on BNS.

- Bernama