No extra funds for LCS project, cost must stay under RM11.22bil, says PAC

KUALA LUMPUR: The Public Accounts Committee (PAC) says the cost of the littoral combat ship (LCS) project must not exceed its RM11.22 billion ceiling and that no additional government funds should be allocated for redoing work or replacing ageing parts.

PAC chairman Mas Ermieyati Samsudin said the committee had recommended that the defence and finance ministries keep tight control over spending to ensure that the troubled navy project does not exceed the approved cost ceiling.

“The total contract cost remains fixed at RM11.22 billion,” she said at a press conference in Parliament today.

Mas Ermieyati said the government was using an earned value management system, with payments made only for verified physical work.

She said this replaced the previous milestone payment system, which exposed the project to the risk of overpayment.

PAC said the project’s overall physical progress stood at 75.73% as of December last year, while the first ship, LCS-1, was 82.90% complete.

LCS-1 underwent its first sea trial on Jan 28, reaching a speed of seven knots, but its delivery has been pushed back to December, four months later than planned.

LCS-2 is now expected to be delivered in August 2027, while the delivery schedule for LCS-3 to LCS-5 remains unchanged, with the final ship due by April 2029.

Defence minister Khaled Nordin previously told Parliament that Norway’s cancellation of the naval strike missile export licence would not affect the LCS delivery schedule, which had been guaranteed by Lumut Naval Shipyard Sdn Bhd (Lunas), the company building the ships.

Khaled said the LCS still had other capabilities, including anti-submarine, anti-air and electronic warfare, as well as a combat management system that integrated these capabilities with the ship’s radar and sensors.

Mas Ermieyati said the LCS project delay was mainly due to a technical audit by France’s Naval Group, which required work to be redone on nearly 4,000 items.

She said 170 major LCS systems still required testing, while some European original equipment manufacturers had gone bankrupt after the Covid-19 pandemic, forcing the contractor to find other vendors and go through fresh certification.

Mas Ermieyati said PAC also recommended that the defence ministry and the navy submit written progress reports to the committee every three months, and that Lunas maintain sufficient stocks of critical items to avoid further delays caused by issues with foreign vendors.