17 April 2010

No Cougar Deal, Says Defence Minister

17 April 2010

Possible Acquisition : The Sentinel OPV is a rehashed Meko A100 modified from the Malaysian Kedah-class (photo : Militaryphotos)

Project Falls Victim to Govt's Cost-Saving Measures

KUALA LUMPUR: The government will not sign the long-delayed contract for the Eurocopter EC725 Cougar medium helicopters at the Defence Services Asia (DSA) 2010 exhibition scheduled for Monday.Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi revealed this via text message to The Malay Mail yesterday.
"We will not sign the Cougar deal," he said in response to queries by The Paper That Cares on the contracts to be inked by the government at the biennial tri-services defence show to be held at the Putra World Trade Centre here from April 19-22.

The local defence fraternity was abuzz with speculation after Ahmad Zahid was quoted as saying last week that contracts lined-up for the ministry involved RM10.417 billion compared to RM3 billion in 2008 and that it mostly involved asset ownership.

However, as Ahmad Zahid stopped short of revealing the assets to be procured, speculation abounded that the asset procurement will, among others, include the contracts for the Cougar and the New Generation Patrol Vessel (NGPV) Second Batch project.

The two projects became the focus of speculation as the ministry had been expected to sign the contracts for both but had not done so for various reasons.

Furthermore, since the government had awarded the projects to the respective companies, the defence industry had expected that this would be followed-up by the contract signing at the exhibition after the minister's statement.

Both the Cougar and NGPV projects fell victim to cost-saving measures adopted by the government following the global economic crisis since mid-2008. Both are considered a priority by the armed forces which have scores of assets at the end or nearing their service lives (see accompanying report).

Defence analyst Isaak Zulkarnaen told The Malay Mail that the industry had expected the contract-signing for both projects.

The Cougar deal involving 12 helicopters, was expected to cost at least RM1.6 billion while the NGPV Second Batch project, depending on the number of ships contracted, could be as high as RM6 billion.

When told that the Cougar deal was off the table, Isaak said: "In that case, the RM10.6 billion figure may well turn out to be the value of memorandum of understanding and possible future requirements. The NGPV contract, I am told, is still being negotiated so it will not be signed at the DSA".

Another analyst, Dzirhan Mahadzir said that despite the statement by the minister, he did not expect any big ticket items to be procured at the show. He pointed out that while the armed forces' wish list was extensive, the ministry have not floated new multi-billion tenders for the last two years.

He said the figure stated by Ahmad Zahid may well turn out to be "the total value of several small procurement contracts involving trucks, spares and other things ranging from RM300 million to RM500 million each. If they sign at least 10 of these contracts the numbers could total up to RM10 billion.

The Malay Mail was informed that one of the contracts to be signed at the show was for an undetermined value of ammunition and ordnance from SME Ordnance Sdn Bhd. The ministry have not failed to sign such contracts with SME Ordnance since the DSA series of exhibitions kicked off two decades ago.

NGPV Top Procurement Priority

THE New Generation Patrol Vessel (NGPV) contract was signed in 1999 and 27 Kedah class vessels were supposed to be built for the Royal Malaysian Navy. But due to the global economic crisis, the second batch project, comprising six vessels, was deferred until the 10th Malaysian Plan scheduled to be tabled in Parliament in July.

Last December, Prime Minister Datuk Seri Najib Tun Razak said the NGPV project was one of the priorities of the defence sector as the shipbuilder, Boustead Naval Shipyard Sdn Bhd (BNS), was about to complete the six vessels in the first batch.

"They need a new order because they have 2,000 companies that depend on such additional work. This is part of the vendor development programme," he said at the Langkawi International Maritime and Aerospace 2009.

Two other defence priorities are the procurement of the Eurocopter EC725 helicopters and the replacement of the army’s 8X8 armoured personnel carrier programme.

Defence funding for the next five years are expected to be announced in the 10th Malaysian Plan.

The NGPV is based on the Blohm + Voss Meko A100 design specifically for the RMN in the early 1990s. Two of its Kedah-class lead ships were built in Germany and outfitted at the BNS facility in Lumut, Perak. The four remaining First Batch of the NGPV were built and outfitted at BNS facilities in Lumut and Penang. With a length of 91 metres and a width of 13 metres, the corvette can reach a maximum speed of 22 knots.

In 2007, the Cabinet decided that the Nuri helicopters operated by RMAF be replaced following a fatal crash near Genting Sempah at Genting Highlands in July that year.

Apart from the Cougar, three other helicopters were offered in the tender – the Agusta-Westland AW101, Mil Mi-17 and the Sikorsky S-92.

On Sept 26, 2008, then Prime Minister Tun Abdullah Ahmad Badawi announced that the Defence Ministry had chosen the Cougar to replace the Nuri and a Letter of Intent was issued to Eurocopter Malaysia. The announcement turned controversial after allegations on abuse of power and corruption surfaced.

Initially, the government defended the decision to select the Cougar, but two weeks later, Abdullah announced that the Cabinet had decided to defer the purchase due to the global economic crisis.


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