LCS contract awarded to BNS

PETALING JAYA: It appears I spoke too soon. From the AFP and BSKL announcement page, it appears that BNS has gotten its LOA from the govt to build the SGPV/LCS or frigate. And more importantly the ceiling price has gone up to RM9 billion. Yes its the ceiling price, it can go lower but have you read any government contract that go lower?

When announced earlier this year, the ceiling price was RM6 billion and almost 11 months later its RM9 billion. I am not a betting man but I doubt that the ceiling price will stay and the delivery date (2017) will be met. AFP call the ships corvettes but the BNS release says frigate-class. As I mentioned before. I will call these ships the Laksamana-class frigates.

KUALA LUMPUR, Dec 17, 2011 (AFP) – A Malaysian shipbuilder says it has won a 9.0 billion ringgit ($2.8 billion) deal from Kuala Lumpur for six naval vessels developed by French manufacturer DCNS.

In a filing with the local bourse late Friday, Boustead Naval Shipyard said it was given a letter of award by the Malaysian defence ministry to build and deliver six “second generation patrol vessels littoral combat ships”.

“The delivery of the first of class ship is estimated in 2017 with follow on ships every six months thereafter,” it added.

Last week Boustead said it had been selected by Malaysia’s navy to build the corvettes, which DCNS says can stay at sea for three weeks and are designed to navigate coastal areas and island groups to fight piracy and patrol fisheries.

The vessels are 100 metres (330 feet) long and can each transport one EC275 helicopter made by Eurocopter, a subsidiary of EADS.

DCNS already had a relationship with Boustead through a joint venture in 2009 to maintain two diesel-propelled Scorpene submarines used by the Malaysian navy.

DCNS has previously sold 11 (wrong its six) frigates to Malaysia’s neighbour Singapore, five of which were built in the city-state. -AFP

BOUSTEAD HEAVY INDUSTRIES CORPORATION BHD (“BHIC” OR “THE COMPANY”) – RECEIPT OF LETTER OF AWARD TO UNDERTAKE THE CONSTRUCTION OF SIX (6) SECOND GENERATION PATROL VESSEL – LITTORAL COMBAT SHIPS (FRIGATE CLASS)

Announcement Details/Table Section :

Further to the announcement made on 18 October 2010, the Company wishes to inform that its associate company, Boustead Naval Shipyard Sdn. Bhd. had received the Letter of Award dated 16 December 2011 from the Ministry of Defence Malaysia for the Contract to design, construct, equip, install, commission, integrate, test and trials, and deliver six (6) units of “Second Generation Patrol Vessels Littoral Combat Ships (Frigate Class)” (“the Contract”). The Contract carries a ceiling of RM 9.0 billion, to be implemented over three (3) Malaysia Plans, 10, 11 and 12. The delivery of the First of Class ship is estimated in 2017 with follow on ships every 6 months thereafter.

The Contract will have no material effect on the earnings of the Company for the financial year ending 31 December 2011, but will contribute positively to the future earnings of BHIC Group.

None of the Directors nor Substantial Shareholders of the Company, or persons connected with them, has any interest, direct or indirect, in the Contract.

Malaysian Defence

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27 Comments

  1. not to complain but RMN needs new patrol assets now rather than 4 years away. the current platforms are being stretched and high operational tempo will only affect the availability.

    Reply
    Yes they do but even if they buy, the Nakhoda Ragam, for example, it will take them at least a year for fitting out and commissioning, if they are lucky. The only way to get out of this log jam is to buy a ship or class of ships still under service and get them to transfer it directly, after a period of training of course, to RMN.

  2. 9 billon ringgit huh?i wonder wat are the armaments for these ships.It better damn worth it for d hefty price tag.hope to hear d complete specs of d LCS soon.

  3. so who is the lucky dude who will benefit from the juicy commission ? Is the scum Razak Baginda who happens to be in M’sia recently, involved in this?

    Reply
    None since the deal goes to BNS directly. That said some of the components of the ships will have to be procured from local agents

  4. Incredible waste of money!

    Let’s compare:

    Singapore purchased 6 Formidable (La Fayette) class frigates (2007-2009 delivery) in a “$750m deal (part of $1.6b ‘Project Delta’); incl 5 produced in Singapore”. (according to SIPRI)

    Norway purchased 5 Nansen class frigates (2006-2009) as “part of NOK14-16 b ($1.5-2.5 b) deal (offsets 100% in 10 years incl production of components and production of 2 in Norway and Spanish order of NASAMS SAM systems and Penguin missiles)”. (according to SIPRI)

    Morocco purchased 3 SIGMA class frigates in a “EUR510 m deal; incl 2 SIGMA-9813 and 1 SIGMA-10513 version; delivery 2012-2014”. (according to SIPRI)

    Maybe we should make a deal with the PLAN to patrol our waters for us. It would be cheaper! Or maybe we could follow Singapore and host the US Navy.

    http://www.defensenews.com/story.php?i=8594213&c=AME&s=SEA

  5. so the deal is confirmed eh? are they gonna be in the same role with the rest of the RMN’s FFL/FFG/FFH?

    Reply
    yes

  6. It not fair to compare with the RSN Invincible class. There are other cost that we dont really know. The 1.6 billion does not fore tell a whole lot of things.

    if you divide the RM9 billion over 6 it will be RM1.5 billion each at current rate of RM3.2, that would be around USD480-500 million each. If you expect it to be armed with ESSM or Aster and other latest updated armament, then it should cost more than US300 million a piece.

    saying that however, in general there is at least 20% “inefficiency” existed in malaysian procurement budget (if we are lucky), as such similar vessels could be built for USD400 million a piece or RM1.1-1.2 billion each.

  7. Koxinga has a good point, especially with the 8 FAC (M) gonnba be retired soon (or has it been retired?). Spratly and Ambalat will remain the focal points but piracy problems and illigal human/weapon/drugs transit have to be look after also. the latter we have the MMEA but they are also under man. Plus we have to consider all these under the auspicious of budget cuts/stagnant for defense.

    Reply
    With RM1 billion to be spend on the frigate annually for the next nine years unless the defence budget is increased dramatically we are going to see some funny things …

  8. waiting for singapore’s 12 LCS announcement to make comparison.

    only problem is that singapore’s LCS might be bigger and more powerful, so it can only serve as indicator, not one to one comparison.

  9. In March, 2000 the Singapore Ministry of Defense signed a contract for 1.6 billion dollar total cost with DCNS Company on “designing and construction” of six frigate.
    (not includes equip, install, commission, integrate, test and trials)

    Reply
    So for the hull and its design its around RM3.9 billion. But they did not announce the cost of the Govt Furnished Equipment and other stuff.
    As for our frigate as usual practice, Boustead will buy source everything on behalf of the Govt, hence the total price is inclusive of the hull, design and other stuff.

  10. The Delta class is also a bigger vessel than the LCS and is more heavily armed. My estimate is that the LCS will be around 1,700-800 tonnes displacement as 2,500 tonnes sounds way off. It will never happen, as the government wants the ships to be built locally, but building the ships in a South Korean shipyard will lead to huge savings and faster delivery. One option looked at for the Lekiu Batch2 was to have them built in South Korea. Can’t fathom why the 1st LCS will be delivered only in 2017! This will mean that until 2018-19 [assuming there are no delays] the main burden of patrolling will still be done by the 6 Kedahs, 2 Vosper PCs, 4 Mahamirus and the 13 FACs.

  11. I tried to do a search cost for equip, install, commission, integrate, test and trials RSS Formidable Frigate but it seems the $$ amount paid is concealed.

    Probably because these things are all not open to public eye.

  12. The ones being worn out are the FACs. The Jerong, Jerong, Handalan and Perdana as they were built in late 70s and metal fatigue would be more pronounced. The question is whether it would make sense to replace these with a similar platform for the same mission or something else altogether like the Nakhoda Ragams.

    Personally, I am in favor of the light OPV or patrol vessel in the 50m range. It would be fairly cost effective and cheap to built in a short time. Austal and the Cape Class comes to mind.

  13. To add, the Cape class are cheap (relative to the Gowinds) and the delivery is rather fast. Once the production line for the Australian Customs are in place, ordering additional boats would mean lesser cost and fast delivery.

    http://www.heraldsun.com.au/news/breaking-news/austal-wins-330m-patrol-boats-contract/story-e6frf7ko-1226113839038

    Reply
    Yes these boats are good for patrol but they seemed to be more suited for MMEA which also operates a lot of old boats. But like RMN, MMEA do not have the money for proper re-capitalisation exercise. The only thing I am not too sure about the Austal boats are the fact that they are made from aluminum which need specialised welders. Not a good idea for technology transfer centric Malaysia.
    I believe the best bet for RMN is to build FACs not more than 65 metre long divided to three types, ASurW, ASW and mine-hunting and the bulk of the fleet should be a number of modified Kedah class since we already bought the rights to the design

  14. Halim, about Canny Ong, tq for the info, still in shock how 2 cops can stop,take the ics,see a woman begging for help, shooting twice at the front tyres, chasing the fleeing car and not report it at all to the balai. And still working for PDRM.
    ———————————————-

    The key to any major purchase is yr knowledge of the subject. Then making informed decisions become easier.

    Then u build the basic foundations steadily,so when the time comes yr industry has the knowledge , capabilities to have greater technology transfer.

    If building something is expensive then find a solution, use different cheaper but same result materials or change the production methods,etc . Plenty of ways but u need to understand the subject first.

    U guys mentioned economies of scale. I always find that amusing.
    While yes it has meaning, its also like the big US companies convincing the world becos of economics of scale there will eventually be only 3 or 4 giants manufacturers.
    Biggest bullshit ever. See what happened to them?

    U need to understand manufacturing, the challenge is always producing something at the right price , to cover yr expenses and make a tidy profit.So simple it may not satisfy people who want something more, some complex formula.

    Anything can be done, as long as u understand the subject first, then build a proper objective and then start to execute b putting in place a sustainable structure to get it done.
    There always is a way.

    9 billion . I just dun know what to say about that.

    I think its about trust and credibility in the end. I dont think those involved have it.

    Only consolation is other countries around us including the US,UK have bigger scandals and bigger billions missing of mishandled.

    I know it dosent make it right but at least we know we are not alone in Mars.

  15. When comparing contracts it is always like comparing apples to oranges. Sure both are fruit, but there is a lot difference below the skin. Without the precise details of any contract in hand, comparison is all guess work. Rest assured, I am certain that there certainly will be “at least [a] 20% “inefficiency””! It will be worse if the vessels will follow the “fitted for but not with” concept!

  16. im down with anything dat will improve TLDM capability to patrol our waters.However,allocating 9 billion for new ships raises the question bout other pressing needs.wat bout the future armaments for the NGPV?will it just be fitted with cannon?if so,u cn just kiss the ship goodbye in case of a conflict arises.and also,will ther b any news in purchasing LPDs or LHDs?since our biggest ship sunk last yr if i recalled correctly.

  17. But that’s not going to happen right? It’s ironic considering that the NGPV programme was supposed to achieve some measure of cost savings through having a common hull design across 20+ platforms among other things

  18. Patrolling, anti piracy, anti illegal fishing, normal continental patrolling are all not RMN’s principal duties.These are the duties of the MMEA and also the Marine Police. The main duty of the RMN is war fighting and protection of the ocean assets of the country-read as oil fields. So if there are no kick backs nor huge commissions made payable to anyone but purely for the purpose of ship building and no large scale launching ceremonies that can cost anything like RM500K for each launching alone, and also equipend with the best fit of hardware and software and weapons for war fighting thne I have no objections. Meanwhile, can the government fit all the weapons which have been fitted for but not with on all the 6 NGPV’s to make it more lethal?. 2017 is a long time to wait and no one can be sure what will happen from next year to 2017.
    As for the FAC replacements, such FAC class boats should be replaced as they have their uses in constricted waterways like the Straits of Malacca and they being more economical to operate, would make good patrol vessels for general duties or act as an advance screen for the main force. Many local yards can produce such crafts for us. It would be economically good for the country if the government can give many of such yards the job of building such boats instead of buying from overseas. Finally with the exception of maybe only one university, all our local unis dont offer any course in Marine designs. For Malaysia to produce local hulls we need expertise in this field. For the Air component we already have three unis teaching aerospace.

  19. the government seems to be like in a shopping spree on new platform for the navy n air force.not that i dont support,but what about the army?so far there have been no news regarding the AV8,and one more thing, does the army top brass has forgotten the necessary of medium range SAMs?or the politician keeps denying them.unless the public was not inform of such purchases like the passive radar system that we have

    Reply
    The AV8 is progressing along, the project team has been sent to South Africa, so we can assume that they finally decided on the Denel turret and gun. No news about ATGM for now. As for MRSAMs, it is now with the Air Force. It is in their wishlist for RMK10 but its not at the top.

  20. In reality the 6 LCS and the 257 AV8 are items needed by the country but somewhat in my opinion that we cant afford, well actually we can but at the risk of running a higher debt to GDP ratio. May be not now or next 5 years but if we keep on continuing spending like what we are doing now, we risk being another Italy or Greece or Ireland.

    needs and aspiration should have a reality check with affordability. The defense of this country need a lot of things from new artillery to replace the 1960’s era guns to additional asw heli, you name it we need it but at what cost. Our politicians and defence planners tends to go for the top of the range big ticket items but tend to forget that we are actually a developing nation, not yet a developed one. Our income can not sustain mega projects that have no economies of scale thus IMHO making the technology transfer redundant at best, wasteful at most.

    As a simplistic idiot, i am making these non comparative comparison:-

    RM1.6 billion for 12 EC725 when the same amount can get 24 MIL 17SH with western standard cockpit and supporting electronics though the possibility of running cost of the MIL is twice of the EC725

    RM8 billion for 257 8X8 when the same amount could get around 1000 BTR3E and additional 200 PT91 M

    well again above just my simplistic view

  21. why are we not purchasing the bulgarian’s gowind class that were cancelled? it’s much cheaper + fullspecs?

    Reply
    Because the Bulgarians never went ahead with the purchase. They nearly went bankrupt.

  22. Mustaffa,

    A number of contracts were signed a few months back for the AV8 – the NBC system, BMS, etc.
    So far nothing official yet on the turrets.

  23. Waiting for first ship to be in operation in 2017 is too much too long. Too dangerous for the country. I heard if i’m not mistaken, The US Arleigh Burke destroyer, takes 3-4 years to be build. It’s a 150 meter+ vessel with state of the art weaponary. Don’t you all feel weird about our new frigate taking to long to be built.

    Reply
    The Arleigh Burkes is on a long term production, they already iron out the problems on the earlier. Our LCS/Frigate being a new and untested design built a novice shipbuilder – like the US very own LCS – needs a long gestation period. Unlike the US we do not have a back-up plan and unlimited funding

  24. Could it be better if we join the RN-BAE system Global ComBat Ship project…as quoted from http://www.defenseindustrydaily.com/Britains-Future-Frigates-06268/“dated Nov 2011
    So far, countries that have been reported as expressing some level of interest have included Australia, Brazil, Canada, Malaysia, New Zealand, and Turkey” those RM 9 billion could be spent for 6000++ ton destroyer size frigate

    Reply
    our infrastructure need to be massively upgraded to support such a big ship. That said six of these type of ship will be good enough to protect our interests in South China Sea.

  25. can we afford these type 26 frigate as the cost reduced.. as the article from the same website quoted
    Nov 29/10: Rumors surface that the UK government is looking to sharply slash target costs for the Type 26 frigates, from GBP 500 million to GBP 250-350 million ($400 – 550 million), in order to field a large enough Royal Navy fleet.

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