KUALA LUMPUR, Oct 21 — French supplier Naval Group (formerly known as DCNS) has agreed to back the Malaysian government’s bid to continue the previously-delayed project to supply six littoral combat ships (LCS) to Malaysia’s Navy and to help ensure the project’s completion within Putrajaya’s timeframe, Malaysia’s Defence Ministry (Mindef) announce today.

The ministry said this was the outcome of a recent bilateral meeting in France by Malaysian officials with France’s Directorate General of Armaments (DGA)’s international directorate director Gaël Diaz De Tuesta, France’s Defence Ministry and Naval Group. The DGA is a government agency of France handling defence procurement.

"Mindef wishes to state, following that bilateral meeting, a few important matters have been achieved: - i. Naval Group has stated its agreement towards and fully supports the government’s efforts to continue the LCS project,” Malaysia’s Defence Ministry stated today, referring to the Malaysian government’s bid to continue the project.

"ii. Naval Group has promised to give its commitment in the efforts to ensure the LCS ship is fully completed in the time set by the Malaysian government.

"iii. Naval Group has also stated its agreement to continue negotiations with BNSSB regarding price,” it added, referring to Malaysian firm Boustead Naval Shipyard Sdn Bhd by its initials.

BNSSB was previously appointed by Malaysia as the main contractor for the LCS project, with its subcontractors subsequently appointing Naval Group (which was then known as DCNS) as subcontractor.

The Defence Ministry said the Malaysian government, particularly the ministry itself and the Navy; and the commercial sectors particularly the Armed Forces Fund Board (LTAT) and BNSSB, are currently undertaking various efforts during the six-month Mobilisation Phase from June to this December to ensure the LCS project can be completed as soon as possible.

The ministry said the efforts include negotiations with various quarters, and said the recent bilateral meeting in France was in line with caretaker defence minister Datuk Seri Hishammuddin Hussein’s instructions for a team from the ministry, Navy and LTAT to carry out face-to-face discussions to smoothen the negotiation process with stakeholders especially in Europe.

Upon such an instruction, the Defence Ministry’s secretary-general Datuk Seri Muez Abd Aziz, the Malaysian Navy deputy chief Vice Admiral Datuk Abdul Rahman Ayob, LTAT’s chief executive officer Datuk Ahmad Nazim Rahman, and several other senior officers of the ministry, Navy and BNSSB had carried out a work visit to Euronaval in France.

The purpose of the work visit included holding that bilateral meeting.

In announcing the outcome of the bilateral meeting where the French company Naval Group expressed commitment to complete the LCS project and agreed to renegotiate the price, the Defence Ministry described this as being a "very significant and positive development” in the LCS project.

The ministry added that this will further strengthen the efforts of all to ensure that the project can resume well in line with the recommendations of various parties including the Cabinet, parliament watchdog Public Accounts Committee (PAC), and the government governance, procurement and finance investigation committee (JKSTUPKK).

It added that the bilateral meeting outcome also showed the mobilisation phase was proceeding smoothly and that all related parties were carrying out their roles as best as they can.

"With this development, it is predicted that all negotiations can be finalised at the end of this December. Mindef will continue to notify about developments in this LCS project to the public from time to time,” the ministry concluded.

In early August, the PAC’s report said BNSSB was awarded a RM9.128 billion 10-year contract from 2013 to 2023 for the supply of the six LCS.

The PAC report also said the Malaysian government had to date already paid RM6.083 billion to the contractor, but none of the six LCS vessels have been completed. Based on the original schedule, five of the six LCS vessels should have been completed and handed over by August 2022.

According to the PAC, the project had run into cost overruns of RM1.4005 billion as the government’s payments to BNSSB was not fully used for the LCS project, noting that the RM1.4 billion overrun included RM400 million that was spent to pay off an old debt for the New Generation Patrol Vehicle project.