SHAH ALAM: Despite the claims by Defence Minister DSU Mohamad Hasan that the first LCS will be completed by late next year, his latest statement in Parliament showed that it might not be the case. He told Parliament yesterday that a third party (likely one of the international companies involved) wanted a letter of indemnity before it takes part in the resumption of the project.
Mohamad said the ministry was not keen on it (issuing the letter of indemnity) and had refer the matter to the Attorney General’s Chamber for advice. He said the third party wanted the indemnity letter as a guarantee it will not be held liable or blame in the future if something occurs with the project.
The minister said the third party will not sign the international settlement agreement (necessary to restart the LCS project) without the guarantee. From The Edge:
KUALA LUMPUR (Feb 22): The Defence Ministry (Mindef) will refer to the Attorney General’s Chambers (AGC) on the international settlement agreement regarding the construction of littoral combat ship (LCS).
Its minister Datuk Seri Mohamad Hasan said this after a third party asked the government to sign a letter of indemnity as a condition before the party signed the international settlement agreement.
He said the letter was to enable the party to be released from all responsibilities or blame should any mitigation factors occur in the future.
“It (the indemnity letter) is an issue that we are very reluctant to sign. We will refer to AGC to get advice on the caveat they placed for them to agree to sign the international settlement agreement.
Clearly, we are in an impasse, which is likely fatal for the LCS project. If one party wanted indemnity, it is likely others will also want one as well. Clearly it is time to abandon the whole thing and start anew. But I guess, the government sees it in a different way.
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No, it wont be delivered in 2024. How? Even the LCS blue print is not 100% approved by Naval.
Even Naval ask indemnity letter. lCS is no longer worth to be restarted. Why must we die die insist to restarted LCS?
Even if the ship are delivered it will not satisfy anyone.
IMHO this latest twist will add more delays to the project, thus increase cost.
It’s not the Naval Group which asked for the letter.
To be a devil’s advocate if we scrap the programme how long will it take for a new design to selected, contract awarded and ships delivered?
If its fast tracked through a RFP it could be done within six months, I have been told. A tender will take likely a year or so before a LOA could be awarded. Yes, I have been asking around actually. And this was not a recent exercise it was done in 2019/20 when they first started looking into the problems.
Followed the Defence Minister’s speech when he fielded the PN’s questions. It was refreshing to start with, no padding up of details. Honestly, I feel YM Rembau knows this time he is feeling heat that’s rather close to his collar. The issue of indemnity is to me, a matter that will work out itself quickly. It’s not a sticking point when it’s when the ships are going to hit water that way more important!
Hopefully the Contracts saga will disappear and the ships 1 & 2 can be completed by end of 2024/2025. Everyone is watching and this government can just wait for Rafizi’s advice to carry out it’s duties.
Lastly IMHO, the 5 incompleted hull of the LCS will be made target practice and become tukun for added value attraction in tourism and fishing industry of the nation. Very funny defence industry that we have.
No. The international companies are smart to ring fence their liability. Even if they had done due diligence on the project, theres still things that will be “discovered” later. Equipment bought warranty may have expired, and BHS may have not followed any standard
Understandably when a project is in this much trouble and there seems to be bad blood between the Govt and the various vendors, they will want as little part and as little risk to themselves and would just prefer to get the job be done with. The Govt, otoh understandably would not want to bear any technical issues that might crop up or shoddy/rushed workmanship.
So there needs to be a middle ground for both if they earnestly want to move ahead. Perhaps some sort of limited indemnity whereby the vendors for the restart would not be liable for issues done by the prior ones but they will be held accountable for the new jobs done.
Taib – ”It was refreshing to start with, no padding up of details”
He’s a seasoned politician who knows how to play the game; knows what to ‘pad’ and what not to. For me it’s what he doesn’t say which is telling and at times what he does say contradicts what he said prior.
Taib – ”a matter that will work out itself quickly.”
You sure about that? I hope you’re right as bureaucratic legal issues tend to be tedious and take time to resolve.
Taib – ”when the ships are going to hit water that way more important!”
For me it’s the ships being commissioned fitted out as intended which is important. It’s bad enough that they ships are modestly armed and only suitable for really non high intensity stuff; will be worse if they enter service lacking certain things.
Sharudin – ”Equipment bought warranty may have expired”
Depends on the agreement drafted. Mostly warranty enters the equation when the said equipment has been fitted and is operational. Whether it covers equipment which has been stored for years really depends on how the agreement has been drafted and can be a gray area.
IMHO just complete 2 units with that initial RM9b budget & scrap the rest. This is the best option. The defense minister didn’t clarify the actual cost of the program if we still want to built 5 units. I reckon it will around 15-16 billion ringgit for 5 ships. 3B per ship. It is not practical & will burst the initial budget. Bite the bullet now, don’t get bullied by all these ridiculous term from Contraves. Clearly something wrong here. Rheinmetall too involved