Only First Two LCS by 2025, PAC Report

38 Comments

1. This is really really wrong……………

   [11.2. Pandangan TLDM selaku end user tidak diendahkan oleh MINDEF dan syarikat BNS dalam pelaksanaan projek LCS.Pada asalnya, reka bentuk kapal jenis SIGMA pilihan TLDM telah dipersetujui oleh Menteri Pertahanan. Keputusan tersebut telah berubah kepada reka bentuk kapal jenis GOWIND pada 11 Julai 2011 atas cadangan syarikat BNS yang dibawa kepada Menteri Pertahanan pada 8 Julai 2011. Memetik kenyataan
   Laksamana Tan Sri Dato’ Sri Dr. Abdul Aziz bin Jaafar, Panglima Tentera Laut pada ketika itu, keputusan tersebut adalah “something is gravely wrong”.] + [Sehingga kini, detailed design masih belum lagi dimuktamadkan oleh Kerajaan dan syarikat BNS.]

   Now we willing spend more to complete this project. The action is right, depend 1st and 2nd ship status only decide by 3th and 4th, however i feel is wasting money and time to so call saving 8k people jobs. Get OEM help done the job which is much faster and secure. Don’t put hope on BNS. Poor to our TLDM, we use to be 1 of the great navy at Asean but now… Myanmar might be better than us.

2. an absolute copy of what happened with the Kedah class. IMHO just scrap the programm and buy direct from manufacturers. Funds for the lcs was used to build BNS facilities is wrong and a breach. After that sue the company let it gulung tikar.

3. They cannot sue a government linked company, its like suing themselves

4. Curious who are these CAD and CAE … “Syarikat BNS telah melantik syarikat CAD dan CED untuk membeli peralatan daripada OEM. Ini menyebabkan kos pembelian bertambah berkali ganda”

5. Indonesia sailing happily with Sigma class since 2017 and they are already planning to replace them with Type 31 Frigates while we are still struggling to finish even 1 Gowind class hull which will be outdated by 2025

6. Contraves Advanced and Contraves Electronics, set up when the NGPV project started

7. Qamarul – ”an absolute copy of what happened with the Kedah class.”

   When national interests is the priority rather than the armed services and the taxpayer and when we can’t learn from our mistakes; is it surprising the LCS programme went ratshit? Yet there are those who still buy the local production self sufficiency myth.

   Z – ”Gowind class hull which will be outdated by 2025”

   Not the ”hull” per see but various components/systems. Hulls get old and the wear but but they don’t normally get ”outdated” per see; unless they are a few decades old.

8. They are not replacing sigmas with type 31..Rather they bought type 31 to supplement the sigmas to gradually replace all Van Spijks..

9. @ Z

   Reports that the first steel cutting ceremony of the Arrowhead 140 frigate variant for the Indonesian Navy is scheduled this month on August 10th 2022.

   Let’s see how it goes.

10. “Laksamana Tan Sri Dato’ Sri Dr. Abdul Aziz bin
    Jaafar [Mantan Panglima Tentera Laut]: … Kita, despite
    all the letters, despite seeing personal presentation to all
    those sama ada KSU, Yang Berhormat Menteri, KSN,
    KSP dan juga Yang Amat Berhormat Perdana Menteri, we
    were fighting a losing battle. We were fighting a losing
    battle. Right from the start, it was not right already.
    Apabila Boustead diberi leeway untuk memilih peraturanperaturan yang sesuai dengan mereka.
    Saya sebagai Panglima Tentera Laut dapat perhatikan. I
    do not put it on record. Barangkali ada some mengatakan
    bahawa– Saya berasakan bahawa dalam suatu keadaan,
    Boustead ini sudah angkuh, angkuh. It means very
    arrogant dan juga mereka seolah-olahnya being very well
    protected. Maknanya, I can write anything. The Chief of
    Navy can write anything but would not do any harm – PAC report page 21

11. A shameful situation. How can Boustead overide the Navy?. What the Navy wants the Navy should get. Not what Boustead wants to sell.

12. It is GLC by name only. BNS is owned by Boustead (68.85%), Perstim Industries Sdn Bhd (20.77%) and LTAT (10.38%) while the Ministry of Finance has a golden share.
    And, the way they work also ignores the end-user.
    For military equipment, we should just go G2G. it will meet national interest.
    Hire more/absorb BNS technical personnel into TLDM to manage 1st & 2nd level support/maintenance; either as TLDM staff, contract staff or create a technical wataniah setup. i.e. regimen jurutera perkapalan (W).
    So, in a way, employment concerns are addressed.
    Design directions and overall project management, pass it to jabatan juru-arah LCS within MOD & TLDM.
    tutup je BNS. if it belongs to govt, easier. just like they closing down SPAD and others. History keeps repeating itself when it comes to Malaysia\’s military purchases.
    We can do the same for SME ordanance.
    Ukraine which produces military equipment have to get additional resources/material from outside. For Malaysia, our military industry is nothing more than trading companies sitting between purchaser and seller; no added value but increases cost je.

13. kubai01 – ”And, the way they work also ignores the end-user.”

    Nothing new; no revelation. Such has been the practice foe decades; the needs of the local industry overriding those of the armed services. Happens everywhere but here we’ve taken it to a new level. We allow it to happen because of our flawed policy; one in which national interests takes precedence over the needs and interests of the armed services and taxpayer.

    kubai01 – ”tutup je BNS.”

    Sounds easy. BNS is the largest naval refit yard in the country and it’s located in the Lumut base. If ”tutup” who takes over? Also it’s not BNS’s sole fault; who decided that BNS should construct all 6 ships despite having no recent experience? By right BNS should have gone through a learning curve; constructing follow on ships with the initial pair constructed by DCNS. Also; who was in charge on ensuring that BNS was actually in a sound position to meet its contractual obligations?

    Ultimately the cockup with BNS occurred because all the right conditions were there; it was the defence policy we have and our gagaland delusion with regards to local production which enabled this cock up to occur.

    kubai01 – ”Ukraine which produces military equipment have to get additional resources/material from outside.”

    The Ukraine inherited the largest stock of weaponry after Russia when the USSR collapsed. Because the current war is so protracted and of high intensity stocks have run low. There is also the fact that in the 1990’s tonnes of weaponry was sold via highly dubious means [the name vikto Bout is well known] to various countries/groups engaged in war; namely in Africa.

    kubai01 -”our military industry is nothing more than trading companies sitting between purchaser and seller; no added value but increases cost je.”

    Something I’ve long pointed out but there are a handful that actually earn their keep by providing added value…

14. Anyone that clamours for change must be ready to accept the abolishment of affirmative action policies. Politics play a part, but the need to have a local company with specific owners was established to “create” champions. Over time, said “champions” became mostly rent seekers (only earn the commission, which are reflected as markups). This happens not only in defence, but other sectors of the economy. Until that change in policy happens, must accept what is and think of ways to work with the system. BNS will continue to be given the “agent” role for all shipbuilding activities as long as it is the designated “national shipyard”, even if the ship is build by a foreign shipyard. So either accept it for what it is, or change. Change could be, break BNS into two companies, MRO and Shipbuilding. MRO keeps all the assets necessary to support maintenance contracts. SPV created that takes on all the shipbuilding debts and declare bankruptcy – let the creditors settle with the SPV through established legal channels instead of back channels haggling (e.g., must protect certain SMEs). It will be very painful for LTAT, which means the Govt needs to bailout LTAT. For example, instead of the additional RM3b payment to complete the first 2 LCS, use the money to bailout LTAT (not BNS). LCS program fails and gets cancelled, not that its any different from the current situation. Govt pony up the money to fund the first 3 ships of LMS Batch 2 in the current RMK (which is likely the expected add-ons the LCS would need to replace obsolete or damaged equipment plus the additional funding required the next 4 ships). Without the next 4 ships of the LCS program taking up future RMK funding, fund the LMS Batch 2’s next 5 ships in the next RMK. If change is not acceptable, just accept BNS will always be the “agent”, and therefore be used by political entities to seek rent (i.e. commissions, which when paid to people involved in decision making is corruption). Sorry but this is what it is. Reality.

15. BNS started out as a refit yard and it did that job fairly well. The problem started when it got into the ship construction business. It can be the “agent” but there has to be a proper oversight. It should not have been asked to construct 6 ships when had no recent experience and it should have been put through a learning curve .

    The key issue which might be not be apparent to some is that the very policy we have in place created and enabled the every conditions which led to a cockup of this mlagnitude.

16. I mean sue the person responsible.Seemed to me the RMN would have to accept the fact that only 2 units will be completed with RM9B rakyat money. 4B each same price as La Fayette class 3600t frigate but with inferior equipments. Where all the money gone is a mystery. Non-disclosure because we know it goes right to the top.

17. It really makes me sad and at the same time angry. How can 6billions money from national coffers released to BNS without progressive payment scheme. USD466Mil per unit is too expensive for the design & equipments it comes with. For example the latest MEKO®️ CSL cost around USD480mil with superior quality & equipments. Looks like the lcs price will be around MYR4.5 bil each? As the ceiling price is MYR9B? If that is the case its totally a big lost for RMN and the people.

18. Sometimes I wonder, whose wallet are getting thicker by this screw up jobs exactly. It’s a large pie, can’t be eaten alone without sharing. Don’t know about you guys but I really want to see these people’s face sleeping at night on their comfy mattresses. Must have been really peaceful.

    And anyway, nobody will get prosecuted over this amirite? Pulling the wool over everyone’s eyes. Onto the next one.

19. Therefore, I guess we are likely to have to accept, “Fine, we accept you as agent. You can take your X% commission. But no more. The design, construction, commissioning will be handled by another team or entity (e.g. the foreign shipyard, foreign manufacturer)”. Let BNS and the “consultants” take their commissions (reflected as markups). Just like LMS Batch 1. The contract was renegotiated to have China make all the ships, yet BNS goes around taking credit. Those ships were overpriced from the beginning, yet having them all constructed in China saved some money. Imagine if the “agent” wasn’t involved, the ships would likely cost less. Now imagine if the 4 LMS ships were to be built by BNS locally – scary indeed. I can close one eye on BNS claiming credit because all ships were delivered. Yes, we end up overpaying, but its acceptable, because we still get the things we need. Accept the higher cost as the cost of doing business in Malaysia. In LCS’s case, project ceiling price was RM9b for 6 ships. But the real project ceiling should have been closer to RM11b for 6 ships, since BNS took around RM1.4b to do other things (clear old debts, build new facility, etc). BNS essentially took a 15% commission for itself. But its ok, that’s the cost of doing business, we have to accept it and would have to accept a RM11b ceiling price from Day-1. Unfortunately, the Govt allowed BNS to lead the design, construction and commissioning – which is where things went sideways real quick. If all BNS had to do was act as liaison (the local agent) with Naval Group and follow Naval Group’s instruction – including the ships to be built locally – hings would have been different. For one, the LCS wouldn’t be the 3100 tonnes overweight monstrosity it is right now, but rather the Naval Group’s own standard and proven 2500 tonnes design.

20. I fully realise some have a flair for being dramatic or to embellish things but the LCS is not an “overweight monstrosity” – unless one is referring to another LCS and not the RMN’s. I know because I’ve actually asked DCNS. Their answer was that the Gowind family is based on various designs of varying displacement. If the LCS was not unable to with a tonnage of around 3,000 tonnes DCNS would not have agreed to it as it damages their reputation in the event of an issue with the design. The RMN would also have put its foot down if the core design couldn’t take that displacement.

    There are various issues with the design in our context; namely too modestly armed bad no free deck space for future growth but being top heavy or an “mbellish things but the LCS is not an “overweight monstrosity” is not one of them …

21. Well this has been a deja Vu many times. When someone is being irresponsible, self interest and morality is being joke, then we will see such results that happened on the LCS saga. Money is one thing, but just because BNS is all mighty and politician power overrides integrity and sincerity sigma became gowind. If there are issues on budget, specification etc etc, need to discussion and come to an agreement moving without compromising the safety the nation. In short if the politician and contractors compromised this what the law said, if a civilian do that, guess it will be a different story. Let’s move forward get this done prove to everyone that BNS is not the same Sh*****d as forging forward.

22. Has the anti air missiles been selected and bought? As in it is part of the RM9b budget? If not does it mean the first two ships will exceed RM9b, or they will stick to RM9b and have no anti air missiles? Is the obsolete equipment (I.e. the 15% mentioned in the PAC report), or possibly damaged equipments replacement part of the RM9b?

23. As I reported previously and also mentioned in the PAC report, the SAM is the VL MICA. They havent bought the missiles but BNS had already signed the contract for the launchers. Yes, if they bought the missiles now, it will exceed the RM9 Billion budget. From my understanding of the report, the government will have to pay to replace the obsolete equipment

24. Heard they at BNS are asking for a staggering 53 billion to finish all the ships and 30 years MRO contract..Are they high or what..? 9 billion just to finish 2 ships are already bonkers..

25. No lah, it’s for the MRO for the ships for 30 years. It’s their proposal after the government rejected the sukuk deal

26. I will be the devil’s advocate to point out that while it is clear the TLDM was obviously displeased with the Gowind selection over Sigma, I would like to point out that unless a preferred platform has clear merits over its competitors, having favouritism in a procurement could raise doubts about impropriety if the Sigma had been selected and it failed.

    And believe me it would have, the issue with LCS goes way beyond the suitability of Gowind platform and I would dare say the fiasco would have likely happened even if we went for Sigma. The situation conditions are there for this chain of failures, BNS would still have difficulties with redesigning the ship, the wastage & leakages would still had occur, delays would still happen, etc. As long as Gowind best fits TLDM requirements there should be no dispute of it vs Sigma. It is because of such disputes that I have said before a blind procurement process would have ensured the enduser gets what they need as it best fill their requirements but might not be exactly what they wanted/demanded, thereby removing all preferential bias that might raise doubts on potential corruption or inappropriateness.

    In this fiasco, no one party are to be blamed or rather all of them have failed so in the manner of Government practices none will be blamed nor be charged. I rest my case.

27. Indeed. The same shite would have flown in all directions because there was no oversight to ensure BNS was ready and there was political insistence for it to construct all ships without going through a learning curve. It’s a reflection of how serious we are with defence and how flawed our defence policy is; when priority is on national interests rather than the end user and tax payer.

28. BNS or its Boustead leaders insisted they were ready which the politicians readily believed

29. The issue with Sigma was that DCNS offered us a more comprehensive ToT and offset deal than Damen and DCNS has stronger political push. National interests.. Same reason why we got Flankers not Super Hornets; Lekius not Kockums boats; AUGs not M-16A2 and why we got Jernas, PT-91s; Laksamanas and a list of other things. National interests..

    BNS naturally would have said they are ready because they need/want the revenue but an apolitical independent assessment should have been performed to certify they were indeed ready. When the shite hits the fan the armed services and taxpayers get buggered thoroughly.

    A perfect example of how sound our policy is; is SME. The logic was simple; a local company acquires the needed expertise from abroad to license produce local ammo. Jobs are created, some level of self sufficiency achieved and we spend locally; so the reasoning went. Several decades later we’ve reached a position where due to a lack of economics of scale we’ve come to the ludicrous position where its cheaper and faster to buy ammo from abroad. Everything required for producing ammo has to be imported and paid for in foreign currency. Then we have outfits like ATSC: given a monopoly to milk the system [read the taxpayer]. A Fulcrum pilot told me of how ATSC use to charge RM150,000 just to remove and reinstall the canopy.

30. This entire project is truly depressing to read and see, I really don’t see a future for our armed forces unless God himself intervenes on our behalf. Is there anything the navy can do currently in the shortest time to increase it’s war capability? Perhaps upgrading the Kedahs temporarily? Or speed up the procurement of the LMS batch 2’s? I’m genuinely concerned for the RMN, especially after hearing from the admiral himself how even Singapore has challenged us at the high seas, how much more humiliation can we endure thanks to a bunch of lowlife, incompetent leaders?

31. So the pandora box is opened….although what is in it already known.
    It is all about policy “hole” in defence procurement that never want to be solved properly. National interest is the repeated reason so someone can get benefit.
    I said before LCS is a political issue that politicians want to avoid it to be solved. It expalin enough why LCS issue takes too long to be solved. It is about political will.
    TOT is bullshit so is national interest. After so many TOTs nothing can be said about it. MY can not even build its own rifle.

    Read a news that ID will start the building of their variant of Arrowhead 140 which is 5 metres longer than the original design.
    Will ID finish their frigate than LCS?
    May be not but it could be.

32. Until 2018, a former Chief of Navy was the Managing Director of Boustead Heavy Industries Corporation (BHIC), the parent company of Boustead Naval Shipyard (BNS) during the LCS program. As MD of BHIC, the person most definitely had full oversight of the LCS program from Day-1. A former Chief of Navy, had oversight of the largest Navy shipbuilding program in history. Yet the LCS program is a failure. Is this an oversight issue? Or a broken system? Oversight already exists – MINDEF, PAC, MOF, PMO, Navy. Adding additional layers of oversight won’t fix it, need to fix the system, the role of “agents” and Ministers. How? Don’t have a clear answer, but agents and ministers shouldn’t change end-user requirements.

33. There is no money in the near term to upgrade the Kedah. I suspect there is also not enough money to buy LMS Batch 2. Anyhow the earliest we can get a LMS Batch 2, is two years ago, if we signed the contract tomorrow.

34. Kel – “. As MD of BHIC, the person most definitely had full oversight of the LCS program from Day-1”

    Who had an oversight on him? Was his priority on his company or the programme? When I mention oversight I mean oversight of the who programme; the main contractor: sub contractor: vendors, schedules, progress, etc.

    Kel- “A former Chief of Navy, had oversight of the largest Navy shipbuilding program in history”

    So? His priority was his company and how do we know he wasn’t ignored when he rang alarm bells?

    Kel – “Adding additional layers of oversight won’t fix it, need to fix the system, the role of “agents” and Ministers”

    Its not “additional” layers but apolitical objective holistic oversight to asess programmes to ensure the armed services get the needed capability on time; within budget and on spec and the taxpayers their money’s worth.

    Kel – “agents and ministers shouldn’t change end-user requirements”

    A lot of things “shouldn’t” be done but in the real world politicians and the industry have a say in procurement [whether here, the U.S, Central African Republic or Pakistan] but here we’ve brought things to a new level. It’s because defence isn’t a priority; because of policies introduced by a former PM which are maintained and because the average taxpayer couldn’t give a shite.

    Jason – “even Singapore has challenged us at the high seas”

    “Even Singapore”? The RSN is a networked centric service which is adequately funded and operates fully jointly with its sister services; all of which are trained to conduct joint multi domain ops in contested or highly challenging operational scenarios.

    Jason- “in the shortest time to increase it’s war capability”

    You mean its ability to first adequately meet its peacetime operational commitments whilst also having some level of deterrent capability against the threats we foresee ourselves facing.

    Romeo – “LCS is a political issue that politicians want to avoid it to be solved”

    You “said”? It’s a issue which brings out a lot of uncomfortable questions which in turn is politically uncomfortable because it raises questions on our defence policy and requires a fundamental revamp for which there is no desire or political will.

35. “there was no oversight to ensure BNS was ready”
    IINM there supposed to be a LCS project team that had overseen the project end to end. On that they should have done due diligence on all the aspects. Problem is apparent when substantial part of the project budget is allocated to cover NGPV debts and the infra upgrading. That meant the 6 ships would have shared a CAPEX of RM 7.5bil which is ridiculous low even without the fiasco.

    National interest would have happened regardless so we should have anticipated that a and up the budgeting to cater for these inefficiencies. Such has always eaten more money that the sum of its products, ie if Korea had allocated an off the self production budget for K2 project, it would have failed miserably. That is why it is arguably the world’s most expensive tank per unit despite not being uber capabled over Abrams or such. The inefficiency of national projects reflects in the product cost and if we want such to be a “success” we need to throw in lotsa money ie the LCS per unit would have to cost more than a Lafayette built in NAVAL. That is the reality we refuse to face. That is why this project “failed”.

    @Romeo
    A sitting Government would not want to change a system that puts them there, which is why neither BN nor PH nor PN nor back to BN again, will want to make meaningful changes as they would not have reap the benefits that goes to the sitting Government.

36. Hence why its not additional oversight. Its changing the system, which is broken. How, I don’t know because its a racially sensitive issue. The only racially neutral change is to strip agents and Ministers from inserting themselves into the design and manufacturing phases, and cite National Security as the reason why exemptions on the use of agents in defense procurement. This keeps the rest of the economy free to be abused, but shields defence procurement from abuse. Or significantly empower the PAC to check the executive branch, or to make the Attorney General (AG) answerable to parliament instead of the Prime Minister so malfeasance cases are prosecuted (e.g. MACC does not have prosecution powers, which only the AGC has, so there’s nothing MACC can do on the LCS as long as the AG says nothing). All of which are racially neutral but strips powers from the Executive Branch – the politicians. If the end user wants A and shortlists X and Y, then no minister or agent can insert themselves and say, you should choose B and consider Z. If A can only be manufactured overseas, no minister or agent can insert themselves and say, no, we need to make all in Malaysia. The Government may dictate terms like local industry involvement and Transfer of Technology, which the vendor will have to determine if its doable. If the vendor says, they are unwilling to accede to ToT and local production terms, then they don’t qualify – end of story. But if the vendor says they will do it and they meet technical and financial parameters, no Minister should have the ability to step in and say, choose this other company offering this equipment instead, because the requirement has been changed to favour this other company.
    Affirmative action policies are real and the damage of poorly implemented affirmative action policies is happening. If structural change cannot happen, the other way is to improve awareness of defence matters and position defence as an essential part of National Power creation alongside Diplomacy, Information, and Economic (i.e. DIME). Once more people are interested in national defence, more parliamentarians will need to understand defence matters. Right now, I dare say probably 9 out of 10 parliamentarians don’t care and don’t understand what’s happening with the LCS program.

37. “IINM there supposed to be a LCS project team that had overseen the project end to end”

    Like the Su-30 project team which amongst other things, kept watch on upgrade works at Gong Kedak and progress with the aircraft; the LCS project team had no authority to do anything beyond monitoring progress and informing higher ups.

    Kel – “Its changing the system, which is broken”

    Well this is something I’ve long harped on for years here but it’s likely as Chad raising an Airborne Corps or the Berbers in North Africa attempting to regain Andalusia. A revamped defence policy will necessitate the political acknowledgement that what we’ve been doing is fundamentally flawed and self defeating – won’t happen. Also the system [when first consolidated in the early 1990’s] is not “broken” because it never really worked in the first place.

    Kel- “Once more people are interested in national defence”

    Not them being “interested” but cognisant to some extent on the need for adequate investments to be made towards defence. Due to history, economics, our geo political environment and self serving and short sighted politicians; the general public has a very indifferent altitude towards defence. It’s different in Singapore [since independence the PAP has drummed the fact that only a strong SAF keeps the island safe] and even more so in Taiwan, South Korea and other places where history and having a clearly defined threat plays a big factor.

38. I’m not sure what is the purpose of expecting politicians to do anything when the voters don’t expect change. Affirmative action policies had good intention but was allowed to rot. Yet very few voters want it changed. Just like the LCS. Some SMEs seem more important than others, even at great cost. Yet voters prefer that said SMEs be saved. So how? Is thinking of an entire revamp of the system going to happen? No. Hoping politicians do the right thing? No. So what are the things that can be done to gradually improve the situation? Not much to be gained by expecting wholesale changes when it won’t happen since the root cause is happening in othet parts of the economy. To change the entire defence procument policy is to also change the non defence procurement policy. So, recommend steps that singularly is hard to say no to, so that collectively, each individual change makes a difference. Parliamentarians would benefit from having recommendations that are tangible and actionable instead of a recommendation for wholesale changes that will never happen. If they ask for that, the government will just form a committee to study the problem, then classify the report. Also despite the focusing on cpability building narrative hasnt helped with procurement in 15 years, no real effort has been made to change the narrative to one that is based on defining a threat. If the messaging thay all it well and no worries 33 million Malaysians, the armed forces is in tip top condition to protect you, why would Malaysians even care about national defence. But, I do see a change in the Navy and Airforce’s messaging, where instead of focusing on capability, they switch to readiness and justify by saying they need to be ready against a threat that we shall not name but we know who and from where. So instead of revamp, what are the tactical actions that can be taken to overcome the challenges?