THE first Littoral Combat Ship (LCS 1) risks being handed over to the Royal Malaysian Navy without full operational capability, with the Auditor-General warning that completion of the project’s complementary contracts could be delayed until December 2035.
The National Audit Department (JAN) said the LCS project was 7.55 per cent behind schedule as at June 25, with delays ranging from 30 to 108 days, putting the earliest physical handover (PHO) of LCS 1 at risk.
It said LCS 1 was initially scheduled for handover on Aug 26, with a revised target of Dec 26.
“If the PHO is carried out on either date, LCS 1 will be handed over without achieving full capability as training and weapon systems have yet to be completed.
“Full readiness of the LCS project is dependent on the Complementary Contracts, which can only be completed in December 2035, beyond the Main Contract’s end date of April 25, 2030. The delay in the PHO of LCS 1 will affect the PHO period for LCS 2 to LCS 5,” JAN said.
The findings were contained in the Auditor-General’s Report (LKAN) 2/2026, tabled in the Dewan Rakyat today.
JAN said the interim audit assessed the management of the LCS project in terms of physical and financial progress, contract management and payments against contractual terms and prevailing regulations.
The audit also took into account recommendations by the Public Accounts Committee (PAC) in its Oct 9, 2023 report for JAN to audit the LCS project before LCS 1 was handed over to the Navy and table the findings in Parliament.
To ensure the project is completed and handed over at the required level of readiness, JAN recommended that the Defence Ministry establish a realistic recovery plan and align all critical activities under the Main and Complementary Contracts with the LCS handover schedule.
The ministry was also urged to ensure that any conditional acceptance of the ships clearly specifies the contractor’s obligations, completion deadlines and responsibilities until the vessels achieve the required capability.
JAN further recommended stronger project monitoring, including appointing officers responsible for each critical issue and setting deadlines for their resolution until the project is completed. - October 5, 2026
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