Audit Dept: LCS project 7.55pc behind schedule, risks handing over ship without full capability

The National Audit Department (JAN) has revealed that the Littoral Combat Ship (LCS) project is 7.55 percent behind schedule as of June 25, 2026. Delays have ranged from 30 to 108 days, as reported in the Auditor General's 2026 Report (LKAN 2/2026). JAN asserts that the delay jeopardizes the Physical Handover (PHO) of LCS 1, originally scheduled for August 26, 2026, and the revised target date of December 26, 2026.

Upon PHO, LCS 1 will be handed over without full operational capability as the training and weapon systems have not been completed. The completion of the LCS project hinges on the Supplementary Contract, which is projected to be finalized in December 2035, surpassing the Main Contract's April 25, 2030 deadline. The PHO delays for LCS 1 will consequently impact the timelines for LCS 2 through LCS 5.

The Auditor General's Report (LKAN) 2/2026, covering the Federal Government's financial statements for 2025, was recently presented in the Dewan Rakyat. JAN conducted an interim audit of the LCS project, evaluating its physical and financial progress, contract management, and payments based on the terms of the contract and relevant regulations.

JAN's recommendation is for the Ministry of Defence to devise a realistic recovery plan, ensuring all critical activities under the Main Contract and Supplementary Contracts align with the LCS PHO schedule. Additionally, JAN advises the Ministry to ensure conditional acceptance of the vessels clearly outlines the contractor's obligations, completion timelines, and responsibilities until the vessels attain the specified operational capabilities.

JAN also suggests strengthening project monitoring by assigning dedicated officers and setting deadlines for resolving each critical issue until the project is finalized.