KUALA LUMPUR (Oct 9): The fifth and final vessel of the troubled littoral combat ships (LCS) issue will not be ready until 2029, according to the Public Accounts Committee (PAC).

In a report published on the official Parliament website on Monday (Oct 9), the PAC revealed that the LCS construction period has been extended to 83 months, thus it is expected that the Royal Malaysian Navy will only be able to obtain all five LCS vessels in 2029 compared to the original contract, which had anticipated the delivery of LCS 5 by 2022.

PAC said, there has been no progress for the construction of the LCS since the PAC visit on Dec 11, 2022, until the PAC's subsequent visit on June 10, 2023.

"The main issue of the LCS detailed design has not yet been resolved, which 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.

"However, the construction contractor has assured that the detailed design would be completed before August 2024, as stipulated in SA 6 (Supplementary Contract 6)," the report stated.

Additionally, the report highlighted that despite the government's decision to reduce the number of LCS from six to five, the construction cost had increased from RM9.128 billion to RM11.22 billion, representing a rise of RM2.098 billion. This escalation was attributed to design costs (RM0.211 billion), equipment prices (RM1.214 billion), insurance and risk (RM466 million), financial costs (RM143 million), and project management costs (RM66 million).

"Delays and extended timelines have been the primary factors contributing to this cost increase," the report explained.

The LCS project, considered Malaysia's largest defence procurement in history, faced intense scrutiny after the PAC revealed last year that none of the six ships had been completed despite the government having paid RM6.08 billion.

In May, Defence Minister Mohamad Hasan announced the establishment of a special-purpose vehicle (SPV) by the finance ministry to acquire Boustead Naval Shipyard (BNS) in order to complete the delayed LCS project on a reduced scale. Subsequently, Boustead Naval Shipyard Sdn Bhd (BNSSB) signed a sixth supplementary contract (SA 6) with the government.

Meanwhile, the PAC also revealed that the SA 6 agreement signed on May 26, 2023 did not receive approval from the Attorney General's Chamber (AGC).

"The department explained that it had informed the Ministry of Defence (Mindef) that further actions were required for SA 6 and that it should have been submitted back to the AGC before signing.

"Mindef's decision to proceed without AGC's approval when signing SA 6 is inappropriate and may have legal implications for the government; such actions should not be repeated," stated the PAC.

As a result, the PAC recommended that both Mindef and the Royal Malaysian Navy take responsibility for ensuring the completion of the entire construction project for the five LCS vessels worth RM11.22 billion, adhering to the agreed timeline and cost outlined in SA 6.

"Mindef must ensure the implementation of the mobilisation plan in accordance with the conditions set, with the first LCS ship completed by May 2024 and handed over to the Royal Malaysian Navy in August 2026. Additionally, Mindef must ensure that the construction contractor completes the detailed design and obtains approval from the Naval Group before August 2024, as stipulated in SA 6.

"The National Audit Department should conduct an audit before LCS 1 is handed over to the Royal Malaysian Navy and present its findings to Parliament," the PAC recommended.

Furthermore, the PAC emphasised that all ministries and government agencies must ensure that draft contracts negotiated with companies undergo orderly consultation, review, and approval by the AGC before they are signed.