04 August 2020

Malaysia mulls contract termination option for littoral combat ship programme

by Ridzwan Rahmat

Malaysia’s first-of-class littoral combat ship, seen here at its ceremonial launch in 2017. (Royal Malaysian Navy)

The Malaysian government is considering several options with regards to the country’s troubled littoral combat ship (LCS) programme including a contract termination with the shipbuilder, state-affiliated Boustead Naval Shipyard (BNS).

The matter was revealed by the country’s minister for defence, Ismail Sabri Yaakob, during a parliamentary session on 3 August. He was responding to questions from two members of parliament who asked for the status of the warship programme.

Putrajaya selected a design variant of the Gowind family of corvettes from French shipbuilder Naval Group (then DCNS) for the LCS programme, and in December 2011 awarded BNS a MYR9.13 billion (USD2.1 billion) contract to build six vessels.

“According to the original plans, two of the six ships should have already been delivered at this point,” said Ismail in his response.

“However as of 31 July none have been delivered, and the overall progress of the project is currently at 56.67%, as compared to the original plan of 85.7%. This is a lag of 29.06% or 31.1 months,” he added.

Ismail revealed further that the programme’s first-of-class is currently 59.79% complete, while the second ship is 48.09% complete. Meanwhile, the third, fourth, and fifth vessels are 43.75%, 36.49%, and 20% complete respectively. Work on the sixth vessel has yet to begin, said the minister.

“With regards to the lateness, MINDEF will seek late payment fees from Boustead as provided for in contract clauses,” said Ismail, without elaborating further on the amount. He explained that moving forward, three options will be presented to the cabinet as part of efforts to salvage the contract.

The Malaysian government is considering several options with regards to the country’s troubled litto...

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