VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Vladimir Putin's introductory remarks:
Last week we held a meeting in Severodvinsk on state defence-industry contracts (some of you attended that meeting). Seven contracts for the supply of warships were signed there, worth a total of 280 billion roubles. Also established at the meeting were the main principles for drawing up state defence-industry contracts over the next three years. Let me emphasise once again that we consider this issue to be a priority, and we expect the Defence Ministry, as the head contractor, and defence-industry companies to work with each other effectively in implementing the state defence programme.
There are challenging tasks ahead. In the next five years, we will be fully reequipping our Army and Navy. The proportion of modern armaments should be increased to 30% by the year 2015, and further up to 70% by 2020. We need to create powerful, integrated air, air defence, naval and ground forces. Today, I propose reviewing how state defence-industry contracts have been executed this year and discussing plans for the year ahead.
Let me remind you that some 750 billion roubles has been allocated this year for the purchase and upgrading of arms and military hardware, as well as for defence-related R&D. This is one and a half times as much as last year. In 2012, we are planning to increase this amount to 880 billion roubles. Never before has the rearmament of Russia's Army and Navy been financed so liberally.
We discussed this earlier today, during the first part of our Government Presidium meeting. Those allocations are justified, as many of our armaments have become old and outdated, and they must be replaced. It's extremely important that ministries and agencies, especially the Defence Ministry and associated enterprises, should make well-coordinated efforts toward this goal.
First of all, we need to ensure that there are no disruptions in the implementation of long-term running contracts, because any delay in supplies is unacceptable. Secondly, defence-industry companies need to have a clear idea of the requirements that their products must meet, and of how the funding of contracts is going to be arranged. Thirdly, we should ensure efficient spending, trying to avoid extravagant expenditures and overblown estimates. All expenditures should be meticulously justified.
At our meeting in Severodvinsk, we discussed the causes leading to difficulties in placing state defence-industry contracts earlier this year. Today, we need to identify a list of specific steps and decisions that would enable us to prevent such problems from recurring in the future, as well as to ensure the effective implementation of state defence-industry contracts and the state armaments programme at large during the period through the year 2020. [Relevant agencies] have been instructed to complete work on the 2012-2014 state defence-industry contract in November. We've now reached mid-November, and the government's Military-Industrial Commission is about to consider the three-year draft contract.
Now, allow me to explain why I've asked you to gather here today in the first place. Following repeated instructions from the president and the government, we agreed to meet in the city of Archangelsk. When we arrived, it turned out that there were quite a few things that had not yet been coordinated. This is why in advance of the meeting, we were compelled to hold a restricted meeting with experts representing the Defence Ministry and the defence industry in general. At that meeting, we once again analysed prices and documents that defence-industry companies were supposed to provide, but had failed to do on time. Questions arose as to what should be regarded as the base product for pricing in serial production. There were also other questions that we had to address on the spot.
Why am I mentioning this now? Some 20 trillion roubles in taxpayers' money has been earmarked for defence spending. We'll have no more money for this purpose beyond the budgeted amount. So we should try to enhance the country's security and improve its defence capabilities using the means that we have at our disposal.
Among the contracts that we concluded in Archangelsk were also non-military ones. Why is it that in civilian contracts, with a private company as one of the signatories, pricing is not an issue? Because (these deals tend to be struck) with all relevant documents submitted and all necessary estimates made in advance, whereas estimates for contracts involving public funds, for some reason, can never be made on time.
Twenty trillion roubles is a huge amount of money, and I have the sense that if we stick to our old schedule, we will be unable to cope with all the tasks that we need to accomplish in this crucial area. As with other costly projects involving treasury funds, such as those related to Olympic construction, here, too, we need a special managing company to deal with the finances. We need to understand the pricing mechanisms that apply here.
I've already asked the Economic Development Ministry to work on this. Where are the results? We'll have to track each one of the contracts, following its passage from one subcontractor to another.
I'm not trying to shift the Defence Ministry's responsibility onto someone else's shoulders. But unless all the price-justifying documents are submitted, the ministry cannot possibly determine the selling price. Who will be working with the subcontractors? What prices will they post at the end of the day? How will the industry be able to keep up with schedule with so many contracts?
The Defence Ministry should have a clear understanding of what the baseline prices are that it can use as a starting point. During our discussions in Archangelsk, we arrived at the conclusion that the Defence Ministry must also modify some of its positions. At that time, we came to an agreement on every item on the agenda, thankfully. But this should become the norm. I don't think we need to expand the staffs of the Military Industrial Commission any further.
I 'm asking Igor Borovkov (the commission's chief-of-staff) to form a group consisting of economics-related Cabinet ministers, as well as from officials of the Defence Ministry, the Tariffs Service, the Industry & Science Ministry and the Ministry of Finance.
First of all, this ad hoc group should focus on issues related to pricing. Prices of all types of products at every point along the production chain should be the focus of their attention, not just the prices of finished products.
Secondly, it should monitor not just the timely completion of contracts, but their proper implementation as well, also all along the production chain. This is primarily the job of the Defence Ministry, but the ad hoc group should also contribute its part. We won't get our job done on time unless we develop a rigorous and reliable tool to work with.
So, there are two areas to attend to. One is purely economic, related to pricing and associated issues, while the other is administrative, having to do with the challenge of improving fiscal, as well as administrative, discipline. It's clear that we do not have enough of this, which is hardly surprising, given the time that has passed since this country last set itself such ambitious tasks in military defence. But this must be done, and the sooner the better.
Let's focus on this topic today. Thank you.
