Defense Ministry reports on arms contracts after presidential reprimand

New plants will be built and many old ones modernized to prepare for the production of new armaments, Defense Ministry says (RIA Novosti / Aleksey Kudenko)
The managers of state enterprises who are distorting the situation regarding the fulfillment of the state defense order will be dismissed, Defense Minister Anatoly Serdyukov has said.

­On Thursday, the minister explained the current situation with armaments contracts for 2011. The day before, President Dmitry Medvedev gave him three days to report on the completion of the state defense order for the current year.

If the information proves true that the defense order has failed, those responsible should be punished, Medvedev said at a meeting on Wednesday. But if such claims were distorted, he suggested that the minister should identify the panic-mongers and dismiss them. The president also warned that last year’s scenario, whereby the program for the purchase of weapons and military hardware failed, should not be repeated.

One of those who claim that the current defense order could have already failed was Yury Solomonov, chief designer for the Moscow Institute of Thermal Technology. In a recent interview, he said that “no contracts have been signed for strategic nuclear forces.”

Serdyukov described this claim as an attempt “to compel state contractors to accept military products at inflated prices,” Interfax reports. The Defense Ministry will analyze the situation and initiate dismissals for those managers who are inciting “panic” in order to actively lobby for defense manufacturers.  

Some contracts for 2011 have not been signed because large holding companies “sharply increased the price of their products,” the minister explained. Such deals accounts for about 18.5% of the financing provided from the state budget, which is, Serdyukov believes, not “a crucial figure.” He confirmed that Solomonov’s institute, which specializes in developing and making strategic missile systems, is among such enterprises.

After the president’s criticism, several high-ranking officials from the Defense Ministry and the managers of several enterprises were dismissed as a result of the 2010 state defense order failure.

Meanwhile, starting from 2012, the ministry has plans to draft contracts with defense manufacturers beforehand, and is ready to pay 100% of the price in advance for defense orders. About 15% of contracts for 2012 are ready. The ministry is planning to sign deals with all their suppliers before the end of December.

The new formula of working with enterprises from the military industrial complex requires that they be evaluated by a special budgetary commission. It is also plans to sign contracts for the upcoming year several months before the end of the current year.

A presidential order issued in May calls for the development of a new state armaments program for the year 2020. Serdyukov said it will be based on the needs of the Russian armed forces and defense industry modernization plans.

New plants will be built and many old ones modernized to prepare for the production of new armaments. As they are intended for new units which are yet to be created, the main financing of the state armaments program should begin in 2015.

Medvedev had said earlier that the interests of customers and producers should be balanced, and the capacity of those enterprises should be taken into account.