Local vendors pledge to work together on LCS project

In the news: A file photo of one of the Littoral Combat Ships under construction in Lumut.

KUALA LUMPUR: Efforts are currently being pursued to end the involvement of middlemen – Contraves Advanced Devices (CAD) and Contraves Electrodynamics Sdn Bhd (CED) – in the controversial Littoral Combat Ship (LCS) project.

The mobilisation phase for the LCS project was also running smoothly in line with recommendations, said Defence Minister Datuk Seri Hishammuddin Hussein.

He said the phase, which is slated from June until December, involved various efforts that had and would be taken by the government, especially by the ministry and the Royal Malaysian Navy, as well as the commercial side, mainly the Armed Forces Fund Board (LTAT) and the Boustead Naval Shipyard Sdn Bhd (BNSSB).

“The mobilisation phase is running smoothly in line with the recommendations of various parties, including the Cabinet and the Public Accounts Committee (PAC),” he said in a statement yesterday.

He added that in the first three months, various matters had been concluded.

“On the commercial side, two things are being conducted.

“BNSSB has concluded talks with 145 local vendors and 42 overseas Original Equipment Manufacturers (OEMs).

“Local vendors and OEMs have pledged to support and work together with BNSSB to resume this project.

“Efforts to end the involvement of middlemen – Contraves Advanced Devices (CAD) and Contraves Electrodynamics Sdn Bhd (CED) – are currently being pursued. This will enable BNSSB to negotiate with OEMs and vendors directly without going through CAD and CED.

“This move can reduce the cost for ship equipment that needs to be paid to the vendor and OEM,” he said, adding that BNSSB was currently negotiating with nine banking institutions to restructure its debt.

“We expect negotiations to be concluded within the period of the mobilisation phase,” he said.

Detailed design for the LCS project was also being negotiated between BNSSB and France’s Naval Group, he said.

“This is important to ensure that anything decided upon will be able to meet the needs of the navy as an end user.

“The Naval Group has decided to send its technical team to perform an audit on the detailed design in October,” he said.

In terms of government to government, Hishammuddin said representatives from the French government had met him and provided a written commitment to resume and solve the LCS project.

“This is an important development and will help greatly, given that the majority of the Naval Group is owned by the French government,” he said, adding that construction of the LCS would resume once negotiations had been concluded and every agreement finalised within the mobilisation phase.

“We expect the first LCS to be completed within two years. It is a realistic timeline as after the end of the mobilisation phase, all parties have 14 months to ensure that the ship is completed and on the water surface undergoing trials such as the Harbour Acceptance Test and Sea Acceptance Trial.

“This timeline must be adhered to by all stakeholders, especially BNSSB,” he said.

Hishammuddin said, as instructed by the Cabinet, a report on the negotiation process during the mobilisation phase would be tabled to the Cabinet on schedule.

“As previously mentioned, the navy has requested the acquisition of Littoral Mission Ship (LMS) batch two while waiting for the LCS to be fully completed.

“The ministry has requested that the Economic Planning Unit and the Cabinet implement this project,” he said.

HIshammuddin said in conclusion, all parties were not looking back but instead working hard to ensure that the navy had sufficient assets.

“The ministry will continue to give its full cooperation in any investigation being conducted by the authorities.”

On Aug 4, Parliament’s Public Accounts Committee (PAC) revealed that some RM1.4bil in government allocations for the LCS project had been used for other purposes, including cost overruns.

The two-year probe by PAC also revealed that the RM9bil project was done through direct negotiations with BNSSB and was inked in 2014.

Two reports were subsequently declassified, including the one by the governance, procurement, and finance investigation committee, which said that the cost of completing the six LCS might balloon to RM11.145bil.

On Aug 17, former Navy chief Tan Sri Ahmad Ramli Mohd Nor, who is the former managing director of BNSSB, was charged with three counts of criminal breach of trust involving RM21.08mil over the project.

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Littoral Combat Ship , LCS , middlemen


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