Reasons for The Higher LCS Cost

All Is Well. Picture at the signing ceremony of the sixth LCS supplemental contract. DSU Mohamad Hasan picture.

SHAH ALAM: Deputy Defence Minister Adly Zahari told Dewan Rakyat today that the additional time given to Boustead Naval Ship (BNS) to complete the five the LCS was one of the reasons for the increase in cost of the project.

He said the additional time given was part of the LCS sixth supplemental agreement signed at LIMA 2023 recently. Malaysian Defence post on that.

From the Star.

“If we look at it, the additional 83 months will add to the cost,” Adly told the Dewan Rakyat during the oral question and answer time on Thursday (June 8).

Apart from that, he said the variation orders and the additional specifications included based on the defence needs of the Royal Malaysian Navy (RMN) such as the surface-to-surface missile and Decoy Launching System was another factor leading to the additional cost.

“When we drafted the SA6, we included a term that the government can pay the original euipment manufacturer (OEM) directly through the Finance Ministry. These are the improvements we have made to the terms of the agreement,” he said while adding that there has been concerns on leakages to middlemen.

Malaysian Defence had previously written that no one knows that the exact cost for the LCS. And it is likely the RM11.2 billion announced will not be the end of it.

Malaysian Defence will post the full transcript of the Dewan Rakyat exchange once it is published on the Parliament website.

— Malaysian Defence

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3 Comments

  1. Curious to know why the NSM SSM cost was not accounted for at the early stage. Changes made after the contract?
    As per the Kedah up-arm plan, I’m assuming it’ll only involve some and not all of the class. Perhaps only the two that have been refitted?

  2. Plausible excuse to hide the real reason: the project was underfunded to begin with.

    Inclusion of NSM was the red flag as those were separately purchased by the Govt, hence that cost was separate from BNS contract, and actuality was already purchased.

    But I do agree that the actual & final cost will be much higher, 12-13 Bil is more a realistic sum.

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