Tag Archives: State Program of Armaments

Re-Industrializing for Military Modernization

Golts

Golts

It’s been Golts overkill.  Despite the risk of overdosing, he has an article in Ogonek from 25 September which merits attention.

One could do much, much worse than to pick him, if you could read only one commentator.

Golts tries to explain why Russia’s OPK, its defense sector, has failed.

He gives prominent examples of defense industrial shortcomings including the most recent Bulava and Proton-M failures.  Interestingly, he says all serially produced Bulava SLBMs are being returned to Votkinsk for inspection.

Calling the list of failures “endless,” he concludes, “Production standards are falling uncontrollably not only in the space sector.”  He continues:

“The thing is not only particular failures.  Experts from the military economics laboratory of the Gaydar Institute suggest that defense order 2013 will be disrupted just as it was in previous years.  According to their data, defense order 2012 was revised and lowered at least three times.  And still it was unfulfilled by approximately 20 percent.  Accounting Chamber auditor Aleksandr Piskunov was extremely forthright in the Duma hearings:  ‘Almost one hundred percent fulfillment of state defense orders for the last 20 years hasn’t interfered with the failure of all armaments programs, with fulfilling them at 30, 40, 50 percent.'”

You may recall reading Piskunov here at the start of April.

Then, Golts notes, Putin himself cast doubt on the OPK’s ability to fulfill the current GPV.  He recalls the late July meeting when Putin indicated he’d entertain slipping ships and submarines due after 2015 into the next GPV (to 2025), so that there aren’t more “failures.”

Putin said work should be organized so producers’ capabilities coincide with the allocated funding.  Money, he said, shouldn’t be hung up in accounts [and stolen] while we wait for ships.  Golts reads this as Putin recognizing that the state of domestic industry is such that it can’t assimilate the gigantic sums allocated to it.

The defense sector has structural problems that endless calls for mobilization to face an aggressive West can’t resolve (i.e. a workforce that’s almost reached retirement age, continued aging of basic production equipment).

Golts again turns to Piskunov, who said only 20 percent of defense enterprises approach world standards in terms of technical equipment, and nearly half are in such a poor state that resurrecting them is senseless — it would be better to start from a “clean slate.”

But Golts focuses on poor coordination and cooperation among enterprises, government customers, and sub-contractors.  He turns to the familiar case of Bulava — 650 different enterprises reportedly have a hand in turning out this missile.

Most damning, Golts compares today’s “so-called united state corporations” unfavorably to Soviet-era defense industry ministries.  Ineffective and bureaucratized, the latter still managed to manufacture massive numbers of weapons.  And Gosplan matched prices for products and production by fiat.  Today’s goskorporatsii can’t.

There’s another important difference, Golts points out.  All Soviet “civilian” industries also produced arms, or parts for them.  Average citizens buying civilian goods helped finance military production with their purchases.

But the largest part of this permanently mobilized industrial system died in the 1990s and surviving parts retooled for other production.  Many in the latter category no longer wanted part of the defense order which would only make them less competitive in their main business.

Then Golts concludes:

“But it’s impossible to begin serial production of armaments without serial production of components.”

Today’s OPK chiefs don’t have the talents of some of Stalin’s industrial commissars, says Golts.  They are, however, good at blaming ex-Defense Minister Serdyukov for “destroying” the voyenpred system.

Golts really gets to it here:

“In reality producers of complex military equipment have a choice.  They can either make components in final assembly plants in a semi-artisan fashion.  Or they can buy them on the side, risking getting crap made in some tent.  It stands to reason the problem isn’t confined to recreating the military acceptance office in enterprises.  Complex chains of sub-contractors have to be established.  And, we note, even with money — this isn’t a banal task.  We’re really talking about new industrialization, the construction of new enterprises.  But just what kind?”

Golts recommends a policy of targeted and specialized re-industrialization.  Because of the expense, he says build specialized component factories to support production of critical systems where Russia is decades behind developed states — communications, reconnaissance, UAVs, precision weapons.  Russia will have to prioritize and Golts doesn’t see tanks, ships, and heavy ICBMs as priorities.  Those who pick the priorities have to withstand attacks from lobbyists for these weapons.

Golts believes Deputy Prime Minister and OPK tsar Dmitriy Rogozin knows the bind he’s in . . . and that’s why he says put off the beginning of serial production of many armaments until the next armaments program (2016-2025).

Golts concludes:

“Generally, the rearmament of the Russian Army is entering a new cycle.  Without any kind of results.”

Clean Slate

It took a brave man to tell the State Duma what department chief Aleksandr Piskunov said in the Audit Chamber’s annual legislative report in February.  Voyenno-promyshlennyy kuryer published excerpts of his remarks.

Piskunov’s a government official.  Not a powerful voice, but an authoritative one in his specialty.

Auditor Aleksandr Piskunov

Auditor Aleksandr Piskunov

To say he’s well-equipped for his work is an understatement. 

Sixty-one or 62 years old, Piskunov graduated from the RVSN’s Dzherzhinskiy Military Academy with a radio engineering degree.  He served on active duty to the rank of general-major, spending many years at the Plesetsk cosmodrome.  He later trained in the RF Government’s Financial Academy and a business school in London.  He has a PhD in economics.

Piskunov served in both the RSFSR Supreme Soviet and State Duma in the early 1990s, and was deputy chairman of the Defense Committee for each body.  He also chaired the Defense Ministry’s Military-Technical Policy Committee.  In the mid-1990s, he moved to the staff (apparat) of the RF Government and was deputy chairman of its Committee on Military-Industrial Issues.

He returned to the Duma briefly in 1999, and became deputy chairman of its “Regions of Russia” faction.

He went to the Audit Chamber in 2001, and is currently in his third term of service.

Piskunov thinks Russia can’t produce new, better, or more weapons and military equipment without modernizing its badly neglected defense industrial base.  But he has pretty much nothing but scorn for the current management of the state defense order.  And he sees little but failure in the GPV over the last 20 years.  In particular, Piskunov calls for incorporating life cycle costs into the GPV.  Ultimately, however, he says auditors and accountants can’t fix the GOZ or GPV, but lawmakers could.

Enough preamble.  Here’s VPK’s excerpt of Piskunov’s remarks.

“STRICT CONTROL OF FULFILLING THE ARMAMENTS PROGRAM IS NEEDED”

“I represent a department that performs strategic audits in the Audit Chamber.  We’ve done a lot of work in evaluating the condition of practically all 1,350 enterprises of the defense-industrial complex, their financial stability and real contribution to equipping the Armed Forces.”

“We looked at how balanced the program of defense-industrial complex modernization and State Program of Armaments were.  A gap of 700 billion rubles was observed.  At the same time, 1 trillion 200 billion is built into the budget to guarantee compensation to enterprise directors who go to commercial banks for credits.”

“Similar credit practices are leading to the growth of OPK enterprises with an unstable financial situation.  More than 30 percent are like this.  Only 20 percent come close to world standards in technical equipping.  More than half are in a condition where their restoration is already senseless — it would be better to build from a clean slate.”

“In preparing the law on the state defense order we tried to correct this situation.”

“From my point of view, our system of administering the state defense order is uncompetitive.  The adopted law preserved the situation under which  management amounts to a lag in the state defense order.”

“The deputy prime minister, responsible for the defense-industrial complex, reported that the state defense order was fulfilled by 99 percent as in past years.  But almost one hundred percent fulfillment of state defense orders over the last 20 years has not prevented the failure of all arms programs or fulfilling them at 30, 40, 50 percent.”

“Dmitriy Rogozin himself noted that fulfillment happened because of the appearance of realization.  During the execution of the arms program 7,200 changes were introduced into it, that is the real result is being slanted to agree with this fact.”

“Meanwhile Rogozin recognized that the arms program has gotten old.  The task of preparing a new State Program of Armaments stands before him.  So the problem of forming a legislative basis and management of the State Program of Armaments is more acute than ever.”

“Our opponents in government, having considered it inexpedient to include the management of the acquisition program life cycle in the GOZ law, said it was necessary to include this management in the law on the State Program of Armaments.”

“To me it seems necessary in this instance to hold them to their word — to propose that the government prepare a draft law on the State Program of Armaments.  It’s possible this will allow us to compensate for not realizing it in the GOZ law, and meet the president’s demand to create essential management of the life cycle of weapons systems.  But today the state of affairs is seriously complicated by the fact that the life cycle is really torn into several parts in the Defense Ministry itself.”

“Those who’ve served understand:  you can’t modernize armaments without the experience of using them.  Who really tracks all this life cycle?  It would be logical if Rosoboronpostavka were occupied with this, but it is located at the junction of the functional orderer — a service of the Armed Forces and a contracting firm.  It would be more appropriate to subordinate this department to the government.  It’s perfectly clear that the main risks are connected not to corruption, but to the low qualifications of the orderer.  Someone needs to “hang” over the orderer from the point of view of its responsibility for how both the program and the contract as a unitary whole are being executed.  Juridical responsibility is not rebuilt only through the contract.”

“The level of project management in our ‘defense sector,’ unfortunately, is also very low, especially the quality management system.  We are all witness to what is happening now in space.”

“It’s frightening that it’s impossible to create new equipment without metrics.  We lost the project management culture and stopped training specialists in military academies and schools.  The very best on this plane is OOO ‘KB Sukhoy’ and it used the American experience-plan for metrics on developmental aircraft.  The Americans seized and simply closed the issue — this project is no longer being supported.  To rewrite project documentation now in some kind of domestic variant is complex, therefore the development of these systems is essential.”

“The participation of commercial banks in providing credit for the state defense order is an important question.  Now in the government they are discussing how these 23 trillion will go — through commercial banks, for free or for money?  It’s understood that banks simply don’t work that way.  There is a precedent — the government resolution on the Mariinka, the Bolshoy [theaters], the M-4 [highway].  If you calculate it, then 20 percent received from 23 trillion over these years, it’s necessary to take an additional amount from the taxpayers or cut the defense order by this sum.”

“Not less sensitive is the issue of intermediaries.  If the Defense Ministry and government don’t put transactions under the strictest control, then there are all the calculations on the defense order, life cycle and cooperation levels, we will mess up this program of armaments also.  This, undoubtedly, is one of the most dangerous questions for the Defense Ministry — too large lobbyist forces participating, too large sums going.”

“Questions of managing the life cycle and control of finances are the most fundamental.  The treasury is incapable of resolving this task.”

GPV 2016-2025

Dmitriy Rogozin

Dmitriy Rogozin

Last week Rossiyskaya gazeta’s Sergey Ptichkin reviewed Dmitriy Rogozin’s comments on the formation of the next state armaments program, GPV 2016-2025.  Rogozin is Deputy Prime Minister and Chairman of the Military-Industrial Commission (VPK) attached to the RF Government.

Rogozin indicated the next GPV will be very different from the current one, according to Ptichkin.

Rogozin said fulfillment of GPV 2016-2025 will be tracked with a new automated system GAS-GOZ, or the State Automated System of the State Defense Order (or perhaps State Automated Defense Order System?).  It’s supposed to allow for “quickly reacting to the smallest failures” in the GOZ.

The Future Research Fund (FPI or ФПИ, the emerging Russian DARPA) will effectively develop the most promising military and civilian technologies in 2016-2025.

Systems now in RDT&E are supposed to be in serial production.  There may be some weapons based on “new physical principles.”

The PAK DA, a new strategic bomber, should be developed and produced during this GPV.  The fifth generation fighter, PAK FA, will be in production.

There will be new missiles, from operational-tactical to strategic, hypersonic ones too.

It’s “not excluded” that aviation-carrying formations (aircraft carriers) will appear in the Navy.

Rogozin said the “active inclusion of the Military-Industrial Commission in developing the future GPV” is a first, and will allow for avoiding “many problems and collisions” along the way.

Rogozin criticized the “former Defense Ministry leadership” for refusing to accept the BTR-90, not ordering the BMD-4, not taking delivery of assembled BMP-3s, and not testing Obyekt 195 (a future tank) after GPV 2011-2020 was already finalized.  Instead, rushed orders for developing and producing the wheeled Bumerang, light tracked Kurganets-25, and heavy tracked Armata ensued. 

These armored vehicles are supposed to enter the force in a year or two, but this seems unlikely.  They will probably become part of GPV 2016-2025.

Rogozin promised the next GPV will be the most balanced, most well-calculated, most innovative, and, at the same time, most realistic.

It’s very early to talk about the next GPV.  Traditionally, this is a sign things aren’t going well in the GOZ or the current GPV.  The overlap in consecutive GPVs makes it difficult (perhaps impossible) for anyone — citizens, lawmakers, bureaucrats, military men, and, defense industrialists — to understand exactly what’s been procured (or not) under each GPV.  This state of confusion probably serves the interests of some of the same  groups.  Rogozin makes it sound as if defense industry, rather than the military, will drive the train this time around.

Putin on Ground Troops and VDV

Meeting on GPV for Ground Troops and VDV

Kremlin.ru has the transcript of President Putin’s introductory remarks yesterday at a meeting on the land armaments portion of the State Armaments Program, the GPV.  This is his second review of where things stand.  Recall in mid-June he held a session on the Air Forces and the GPV.

Noting that “leading countries” are increasing the potential of their ground forces with new reconnaissance, C2, and “highly accurate” systems, as well as modern armor, Putin continued:

“I remind you in the framework of the state armaments program to 2020 it’s planned to allocate more than 2.6 trillion rubles to outfitting the Ground and Airborne forces.  We have to reequip units and sub-units, to fill the troops with new equipment with these resources.  By 2020 its share must be not less than 70 percent.”

“So 10 ‘Iskander-M’ brigade missile systems, 9 S-300V4 army brigade SAM systems, more than 2,300 tanks, nearly 2,000 self-propelled artillery and gun systems, and also more than 30,000 units of automotive equipment alone must enter the Ground Troops.  Besides this, it’s planned to introduce new communications, C2, advanced reconnaissance systems, individual soldier systems.”

As previously, the president stressed that complete fulfillment on schedule and at agreed prices is “very important.”

Then Putin turned to three problem areas.

First, fielding new weapons systems is complicated by the involvement of many sub-contractors.  A breakdown in one contract can cause an entire effort to fail.  Putin cited the VDV’s new BMD and YeSU TZ as examples:

“[BMDs] still haven’t gone through state testing and, as a result, haven’t been accepted into the inventory.  In turn, this is impeding development of practically all the VDV’s weapons sub-systems.  Today I’d like to hear, respected colleagues, why the task of the state program in the area of armor development and supply to the VDV hasn’t been fulfilled.”

“Creating a unified command and control system for troops and weapons at the tactical level [YeSU TZ] is another example.  The test model still doesn’t fully answer the requirements the Defense Ministry set out.  And I’d like also today to hear how this question is being resolved.”

Refer here and here for recent words on the BMD-4M and YeSU TZ.

Second, the Ground Troops and VDV spend too little on R&D (10 and 5 percent of what they spend on serial purchases and repairs respectively).  And the R&D money is put toward a small number of projects.  The president wants more work on advanced soldier systems, infantry weapons, individual protection, and comms.

Third, and finally, there’s a mess in Russia’s munitions industry.  There’s no long-term plan for ammunition makers, and this presents a problem for new arms systems.  The time has come, Putin said, to determine how the Defense Ministry and enterprises in this sector will interact.

President Putin has really seized on the GPV.  It seems near and dear to him.  Or perhaps it seems more tractable than Russia’s political and economic problems.  More amenable to his directive leadership and manual control.

The cases Putin mentioned are longstanding, well-known “poster children” for the problems of the OPK, i.e. easy and logical targets.  One wonders what more pressing and acute, if less publicly advertised, military-industrial difficulties were discussed.  Putin’s focus on R&D is also a bit odd when you consider it’s been blamed for waste and slashed.

Putin didn’t address strong rumors and denials of slipping the schedule for GPV 2011-2020 to 2016-2023.

Does the GPV Look Like This?

If Putin keeps on the GPV, perhaps we’ll gain a somewhat sharper picture of how it’s shared out.  It’d be interesting to learn where the RVSN and VVKO fit.

Pukhov’s Perspective

Thanks to VPK.name’s retransmission of Interfaks-AVN, we can look at Ruslan Pukhov’s latest comments on the State Program of Armaments, 2011-2020 (GPV-2020).  Recall he’s director of the Center of the Analysis of Strategies and Technologies.

In a nutshell, AVN concludes Pukhov believes the Russian Army’s rearmament requires much greater resources than provided in GPV-2020, but the country’s economic possibilities don’t allow for spending more:

“Twenty trillion rubles which were proposed to allocate for the purchase of armaments and military equipment by 2020 — this is the minimum amount essential for rearming the army, but at the same time it’s the maximum possible volume of resources which can be spent on armaments, proceeding from the possibilities of the country’s budget and economy as a whole.”

Pukhov goes on to say some experts have said 36 or even 50 trillion rubles would be required to rearm all Russia’s armed services and branches completely.  That, of course, is beyond the economy’s capabilities:

“Even the current plans are highly ambitious and entail very high macroeconomic risks.  In the event of the actual fulfillment of the plans for financing GPV-2020, the average annual expenditures on purchases of arms and military equipment will come to 2 trillion rubles a year, that is nearly €47 billion at the current rate.” 

For comparison, Pukhov told AVN Britain and France, with economic potential similar to Russia’s, each spend less than €20 billion annually on new weapons.

Pukhov sees military spending of 4 percent of GDP when the Armed Forces’ other needs are considered:

“Accounting for the need to realize not just the rearmament of the Russian Army, but also to increase significantly the number of contractees, to improve soldiers’ food, clothing, and pay, to resolve the housing problem for servicemen, it’s impossible to exclude that at some time military spending could reach four percent of GDP.” 

He sees it as a very high share of GDP for a country facing the modernization of health care and education, and also the renewal of all its infrastructure.  Still, he concludes:

“But considering the country’s defense was underfinanced for fifteen years and the high probability of the aggravation of the military-political situation in the post-Soviet space, especially in Central Asia, the military expenditures provided are not only acceptable, but even absolutely essential.”

In these sound bites, Ruslan Pukhov’s views sound reasonable, independent, and nuanced given that he tends to reflect defense sector interests.  He recognizes Moscow’s at the limit of what it can spend on new weapons, and he cites figures you read here or here early this year.  He could have noted that the goal is only to renew 70 percent of the Armed Forces’ inventory by 2020.  He acknowledged it’s a lot of money for a country, and a military, facing other expensive challenges, but he maintains it’s necessary by pointing to the neighborhood Russia lives in. 

It’d be interesting, however, to see an interview or article exploring the possibility that Russia can meet its most likely, most realistic military threats and requirements more efficiently and effectively than envisaged under GPV-2020.  Perhaps some services, branches, and unified strategic commands need more money and modernization than they will get, and maybe others need less.  One doesn’t read much about relative priorities within the Armed Forces beyond the fact that the Navy will be emphasized and the Ground Troops won’t.  The rest of the military apparently will move forward on a very broad front.  It’s probably not the best force modernization approach.

Quoting Tolya

Tolya’s remarks to the press today made quite a few headlines, and left a few useful benchmarks for the future.  Defense Minister Serdyukov addressed procurement and manpower issues.  Here are his quotes from RIA Novosti and ITAR-TASS.

Tanks for Nothin’

“We met the designers who proposed their preliminary work to us.  60 percent of what was proposed is old work.  Therefore, we still declined these proposals.”

“Now it’s more expedient to modernize our country’s tank inventory than to buy new ones, for example the T-90.”

Cold Water on Carriers

“We have no plans to build aircraft carriers.”

“Only after this [a preliminary design of what this ship might look like], the Genshtab together with the Navy will make a decision on the need for such a ship.”

SSBNs Aren’t Automobiles

“‘Bulava’ flew, this is good news.  We understand precisely that it’s possible to launch serial production of the missile on this variant.”

“We got the result, now it’s possible to load SSBN ‘Yuriy Dolgorukiy’ with ‘Bulava.'”

“We’d like to do this [test Bulava from Aleksandr Nevskiy], but we understand that to plan this precisely is impossible.  A nuclear submarine isn’t an automobile.”

Bullish on Arms Deliveries

“Deliveries of strategic missiles ‘Topol-M,’ ‘Yars,’ ‘Avangard’ will increase three times, ‘Bulava’ and ‘Sineva’ missiles for strategic submarines one and a half times, aircraft four times, helicopters almost five times, air defense systems almost two and a half times [in 2011-2015 compared with 2006-2010].”

Not Going Below a Million Men

“There are no such plans, there are no questions of cutting manpower.  We’re striving for the entire army under the million number, and it isn’t planned to cut this figure.”

“On account of this [increasing contractees from 2014], we’ll manage without fail to get through the demographic hole which is anticipated in 2014.”

Two Arctic Brigades

“The Genshtab is now developing plans to establish two of these formations.  In the plans, deployment places, armaments, manning, and the infrastructure of these brigades need to be specified.”

“It’s possible this will be Murmansk, Arkhangelsk, or another place.”

Kicking the Defense Ministry and OPK

President's Meeting on the OPK

President Medvedev is irritated as ever that the Defense Ministry and OPK aren’t moving out smartly to rearm and reequip the Armed Forces.  He’s trying to kick them into gear, but can he get results where his predecessors either didn’t care or simply failed?

According to Kremlin.ru, Medvedev met this afternoon in Gorki with a host of government officials and industrial chiefs.  They included, inter alia, Sergey Ivanov, Anatoliy Serdyukov, Vladimir Popovkin, Nikolay Makarov, Denis Manturov, Yuriy Borisov, Sergey Chemezov, Sergey Nikulin, Mikhail Pogosyan, and Roman Trotsenko.

Medvedev’s opening monologue enumerated what’s been done for defense industry — providing a full state defense order and financial support, creating integrated development and production structures [OSK, OAK], etc..

Then the President says:

“However, despite all adopted measures, the state of defense production cannot be called good, all attending understand this.  There are objective reasons:  the deterioration of enterprises’ basic capital is nearly 70 percent (on average), in some enterprises it’s all much worse.  We still have not even managed to establish effective mechanisms to attract innovation and off-budget resources to the defense-industrial complex.”

Medvedev goes on to say that all relevant documents, including the GPV 2011-2020, have been signed, but the assembled group still needs to think about how to implement the GPV.  He reviews how he talked at the Defense Ministry Collegium in March about balancing producer and buyer interests, about justifiable and understandable prices.

But in many areas, says Medvedev, this has already become moot, and he intends to increase responsibility for the fulfillment of these obligations.

First, he wants a Federal Goal Program for OPK Development in 2011-2020.  Its focus is to be “real readiness” of the OPK to produce actual weapons and equipment.

Second, he wants the Defense Ministry to finish placing GOZ-2011 completely by the end of May, and advance payments issued to producers in accordance with the 2011 and 2012-2013 plans.

Work to date, he says, is going poorly and slowly.  He reminds the assembled that he told them about the failure of previous state armament programs:

“Today I want to hear from all present why this happened:  both from government leaders, and from industry leaders, who was punished for this and how.  Report proposals to me, if they still aren’t implemented, with positions, with the types of responsibility, completely concretely.  If such  proposals aren’t reported, it means [industrial] sector leaders and government leaders have to answer for it.”

It’s unacceptable, he says, that high-level decisions have been made, money allocated, but a product isn’t supplied.  He recalls his late 2009 Poslaniye in which he said 30 land- and sea-based ballistic missiles, 5 Iskander missile systems, nearly 300 armored vehicles, 30 helicopters, 28 combat aircraft, 3 nuclear submarines, one corvette, and 11 satellites would be delivered in 2010.  

Everyone here, says Medvedev, agreed with this, so why wasn’t it done.  He is, he says, waiting for an answer, and:

“. . . we have to answer for the duties we’ve taken on ourselves, we look simply in this sense absolutely unacceptable.”

Medvedev finishes by saying he knows military production is profitable, and it’s possible to attract strategic investors.  He says he wants to talk about how to stimulate investment.  The goal for the day is concrete reports on what’s been done on the level of those responsible for organizing work and correcting the situation in defense industry.

Where’s this leave things?

Not exactly throwing down the gauntlet, just another warning that he’s getting serious.  But it’s doubtful the government or defense industry will take Medvedev seriously until he fires a minister, other high-ranking official, or an important enterprise director.  And it’ll probably take more than a couple dismissals to get anyone’s attention.  Medvedev is running out of time on this account (as well as others).  Those he’d like to make responsible or punish will just take the tongue-lashings and wait him out.

Corruption and the GPV

This morning’s press included various accounts of statements from Igor Korotchenko or in the name of the Defense Ministry’s Public Council, on which Korotchenko serves, about mitigating the impact of corruption on the State Program of Armaments (GPV), 2011-2020.

RIA Novosti quoted Korotchenko to the effect that the rearmament program will only be successful with strict financial accounting and effective measures against corruption in the State Defense Order (GOZ or гособоронзаказ).

He said Defense Minister Serdyukov is taking steps to ensure that resources are used as intended, including the establishment of a Military Products Price Formation Department and the resubordination of the Federal Arms, Military, Special Equipment and Material Resources Supply Agency (Rosoboronpostavka) to the Defense Ministry.  But the latter step was done over six months ago, and not much has been heard about it since.

Novyye izvestiya and Novyy region quoted the Public Council’s statement:

“But for the army to receive all this [equipment in the GPV], money is simply not enough – it’s necessary to make things so that Defense Ministry generals, who to this point were occupied simultaneously with orders and purchases of weapons, don’t get access to money, are occupied only with formulating lists of everything needed for the conduct of modern war, but the function of monitoring prices and purchases should be transferred to other departments.  Otherwise, government resources allocated to the GPV will get ‘sawed off,’ placing this program in jeopardy.”

Those are, of course, the jobs of the new Price Formation Department and Rosoboronpostavka.  Serdyukov’s tax service veterans are supposed to free the payments system from graft, and use their experience to uncover complex theft schemes.  Military prosecutors are also expected to be more active here.  Main Military Prosecutor (GVP) Sergey Fridinskiy told Novyy region about prosecutors’ work in uncovering the theft of 6.5 billion rubles’ worth of military budget.  He claimed his prosecutors have stopped 240,000 violations, suspended 12,000 illegal actions, held 40,000 people to account, and returned 4 billion rubles to the treasury.  But it’s not clear what time period he’s talking about.

RIA Novosti recounted Korotchenko’s comments about preventing corruption in military RDT&E:

“Special control needs to be provided on scientific-research work and justification of expenditures on it, but also on the development of new types of armaments, since it’s precisely here that opportunities for different types of financial machinations and abuse exist.”

Of course, reminds RIA Novosti, RDT&E only amounts to 10 percent of the GPV.  Bigger chances for theft exist in procurement, which is supposed to be 78-80 percent of the rearmament plan.

According to Novyye izvestiya, on the procurement side, Korotchenko says, in past years, a minimum of 45-50 percent of money for arms simply ended up in someone’s pocket.  For this reason:

“For the very same money, Russia buys 14 tanks a year, and India 100.  This led the country’s leadership to the kind of thinking reflected in the Defense Minister’s authority to reorganize the entire purchasing scheme.  This time [the new GPV] 19 trillion rubles are at stake.  Can you imagine with what interest the ‘market players’ are waiting for them?  But the state machinery is running: many OPK directors are already being removed, in the case of the director of one of the system-forming design bureaus, suspected of stealing money from a state order through offshore shell companies, an investigation is being conducted, and other criminal cases in orders-purchases from previous years are also possible.”

The nongovernmental National Anticorruption Committee says the average kickback in civilian contracting is 30 percent, but, in defense, it’s 60 to 70 percent.  Because arms prices are secret [and hard to determine anyway], no one knows how much this is.  But common sense says this makes everything cost nearly twice what it should.

Popovkin Details the GPV

Yesterday First Deputy Defense Minister Vladimir Popovkin gave RIA Novosti more details on Russia’s procurement plans under the State Program of Armaments (GPV), 2011-2020.  He said 78-80 percent of the 19-trillion-ruble Armed Forces portion of the GPV will go to procurement.   

Popovkin said Russia plans to develop a new liquid-fueled heavy ICBM to carry up to ten warheads, and having a service life of up to 35 years.  Former RVSN Commander General-Lieutenant Andrey Shvaychenko talked about a new liquid heavy as far back as late 2009, and the issue’s been debated in the Russian military press since. 

Popovkin said the Defense Ministry plans to accept the Bulava SLBM and the first two Borey-class SSBNs this year.  There will be 4-5 Bulava launches this year.  Recall to date only 7 of 14 Bulava tests have been successful.  Addressing the missile’s past failures, Popovkin said there were many deviations from the design documentation during production.  He also said Russia plans to build eight SSBNs to carry Bulava by 2020.  He was unclear if this includes the first two Borey-class boats.

Popovkin said work on a new strategic bomber is ongoing, and he claimed a technical design will be complete in 2015.  He said this work isn’t being rushed.

Popovkin told RIA Novosti  the Air Forces will receive more than 600 new aircraft and 1,000 new helicopters by 2020.  In 2011, Su-27SM, Su-30M2, Su-35S, Yak-130, and Su-34 aircraft are to be procured.  More than 100 helicopters, including Mi-26 transports and Mi-28N and Ka-52 combat helicopters will be acquired this year, according to Popovkin. 

Popovkin said a contract for the first ten experimental PAK FA (T-50) aircraft will be signed in 2013, with serial production of 60 aircraft beginning in 2016.

The GPV includes the purchase of ten S-500 air defense systems.  Popovkin said this system will begin testing in 2015, initially with missiles from the S-400.  Fifty-six S-400 units will also be purchased by 2020.  This sounds like seven 8-launcher battalions.   

Popovkin said the GPV will buy 100 ships – including 20 submarines, 35 corvettes, and 15 frigates – for the Navy.  He didn’t specify types for the other 30 ships, and it’s unclear if new SSBNs are included in these numbers.  Popovkin reconfirmed Russia’s plan to buy two and build two Mistral amphibious ships.  Recall also the Black Sea Fleet alone is supposed to get 18 new ships including proyekt 636 diesel-electric submarines, proyekt 11356 and 22350 frigates, and proyekt 11711 LSTs.

Popovkin also mentioned plans to buy a limited number of French FELIN soldier systems, with the intent of Russia producing its own version by 2020.  He looks for it to equal the advertised capabilities of U.S. and German equivalents.

The Foggy Goal of the GPV (Part II)

Sovershenno sekretno’s Vladimir Spasibo describes the early post-Cold War process of mergers and consolidations in the Western defense industries, and then asks:

“And how are our integration processes going?  By altogether different schemes.  Mainly by creating industrial ‘kolkhozy.’”

His example is the United Aircraft Corporation (UAC or OAK) which conglomerated most Russian aircraft designers and producers.

Spasibo says this consolidation should have eliminated problems with skilled personnel shortages, technology losses, obsolete production lines, low labor productivity, product quality, duplicative development, and excess capacity.  But it didn’t.

Spasibo examines the labor force in the OPK’s aircraft industry.  He claims with VVS purchases of 380 billion rubles per year, and productivity of 6 million rubles per worker (three times less than Boeing’s rate), there should be 66,000 workers in Russia’s industry, but its 6 lead plants have more than 100,000 workers, and the aviation industry overall has more than half a million.

He looks then at the labor force for the entire OPK.  With purchases totaling 19 trillion rubles, with modest productivity of 3 million rubles per worker over ten years, the OPK should have 630,000 workers, but Rostekhnologii General Director Sergey Chemezov says there are now 1.2 million.  And Spasibo concludes good specialists won’t work for what companies are able to pay as a result.

Chemezov has pointed out that only 36 percent of Russia’s “strategic enterprises” are financially stable; at the same time, 30 percent show all the signs of bankruptcy.  The situation is particularly bad in the munitions and special chemicals sector, where nearly 50 percent of companies look like potential bankruptcies.

Spasibo adds that only 15 percent of the OPK’s technologies meet world standards, 70 percent of basic production assets are outdated, and the equipment renewal rate is only 3-4 percent.  He says:

“To count on these companies being able to produce the weapons required is laughable.  But they will absorb the money they receive.  Naturally, without any particular result for the reforming Armed Forces.”

Spasibo concludes:

“The ‘estimated expenditures’ of the Defense Ministry obviously demonstrate that we’re again being dragged into a senseless and dangerous arms race which in no way increases our military security.  On the contrary, it increases the risk of creeping into military conflicts.”

“NATO and the U.S. absolutely don’t need a war with Russia.  China doesn’t either.  Even despite periodic rumors that it has territorial claims on us.”

“But it’s impossible to make these claims by military means.  Especially if Russia will have a modern high-tech army.  But once again no one is building it.  And doing this is impossible, scattering resources on strategic arms, VKO, an ocean-going fleet, whose role in the hypothetical case of war is completely incomprehensible.  The situation’s exacerbated by the lack of an entire series of experimental models fit for production and supply to the Armed Forces, an obsolete technological and organizational structure of OPK enterprises which, most likely, will turn the money into dead metal.”

“During perestroyka, we learned that the USSR lost the ‘Cold War’ to the U.S. and that the arms race killed the Soviet economy.  Scholars and commentators talked about this with figures and facts.  In those days, there were many suggestions about what to do with the Armed Forces and VPK.  But all this ended in empty talk.  In fact, they simply killed the VPK.  They practically didn’t invest money in the Armed Forces.  There was neither an army, nor a defense industry to arm the army.”

“And here a time has come when the Kremlin and the White House have decided to modernize the army and, using the financial possibilities that have appeared, to pour 20 trillion rubles into it before 2020.  But won’t we now be stepping on the very same rake as in the eighties, won’t the president and premier be repeating the mistakes of the Politburo, initiating a thoughtless and dangerous arms race?  The key word here is thoughtless.”

“Of course, the draft State Program of Armaments, 2011-2020 is a document under the top secret seal.  Does this mean the public shouldn’t discuss and understand what trillions will be spent for.  Or is it the prerogative of a narrow circle of interested officials — lobbyists for the VPK and the military?”

“The trouble is old and familiar.  Recently deceased  Academician Georgiy Arbatov wrote about it in 1990:  ‘An affair most important for the country and the people — defense, security, fantastically large military spending — was monopolized by a narrow group of generals and general designers from military industry.’  And further:  ‘I think the military shouldn’t be given a monopoly on assessing the threat of war.  Just the same it’s reasonable not to make this assessment without accounting for its opinion.’  It just shouldn’t dominate this.”

Thank you Mr. Spasibo.  A good article.  He has a clear point of view on the issue of the GPV and where the Russian military might or might not be headed.  But where does it leave us?

Just a little commentary . . . Spasibo says Russia aims to match NATO, the U.S., and maybe China too.  This raises the issue of whether it should aim for this and whether it can achieve this.  The answer to both is no.

That is, however, not the same thing as saying the Russian Armed Forces don’t need to modernize.  If they were smart, they’d aim for capabilities to offset the advantages of their stronger potential enemies.

That means difficult picking and choosing, something we haven’t seen much of in the GPV, where it looks like every service is at the table awaiting a full meal.

Russia is definitely not France, but this doesn’t mean Moscow has to defend everywhere.  Perhaps it should prioritize and worry more about Vladivostok and China than about Iturup and Japan.

Spasibo does a good job of pointing out that there are at least as many problems in the VPK, the OPK as in the military itself.  And yet there’s no real effort yet to remedy them.  All of this goes to whether Russia can reach whatever aim it sets for military modernization.  As Spasibo says, they might just be sending good money after bad.  They may be risking a repetition of past mistakes by overspending on arms, but, of course, they may not even get a chance to repeat these mistakes if money isn’t allocated.  Remember that previous GPVs died of financial starvation in their infancy.

One’s not sure about Spasibo’s argument on Moscow’s promotion of an arms race.  Right now, only the Russians need to ‘race’ — and the race is to catch up after years of falling behind.  And it doesn’t necessarily need to catch up to the extent that it duplicates U.S. capabilities.

And yes Spasibo’s right in saying these defense expenditures should be debated and decided more widely and publicly, but unfortunately Russian citizens have even more basic and important political and social issues that need that kind of scrutiny first before they get down the list to military procurement.