Defense contracts 2011 to be signed on time – minister.

29/7 Tass 79

MOSCOW, July 29 (Itar-Tass) —— The Russian Defense Ministry and the defense sector will sign this year’s contracts and report the signing by the deadlines set by the president and the prime minister, Defense Minister Anatoly Serdyukov said on Friday.

“The president has ordered to complete the placing of state defense orders 2011 within ten days. We signed all the contracts on our part and sent them to the plants on time,” he said.

“The premier has ordered the drafting a joint report of the Defense Ministry and the defense sector before the end of August,” Serdyukov said.

“I think we can fulfill both orders on time,” he said.

Prime Minister Vladimir Putin chaired a conference on defense procurement on Tuesday.

“As far as I know, more than 30% of defense contracts have not been signed,” he said. “A reason is the price war between the servicemen and the defense sector. No matter where I come I hear criticism of the Defense Ministry. I hear similar complaints from the Defense Ministry, which says that prices are rocketing. The same complaints come from law enforcers,” he said.

“The Emergency Situations Ministry says that helicopters have increased in price by several times,” he said. “What is the inflation rate of this year?” he asked Vice-Premier, Finance Minister Alexei Kudrin. “The accumulated inflation is about 5%, while the planned inflation of this year is 7-7.5%,” Kudrin replied.

The premier said excessive prices of defense products must be investigated.

“The prices of certain types of military hardware have grown manifold, not just by 5, 7 or 8 percent. That won’t do,” he said. “We must find a way to change the situation.” Putin demanded a more rapid signing of defense contracts and said that the biggest attention must be given to products with a long production cycle. “These are space rockets, aircraft and naval systems, which will shape the future Army and Navy,” he said.

The premier criticized the new formula of funding of defense orders. “A substantial amount of loans has been planned for this year – about 168 billion rubles on state guarantees, and these resources are a part of the orders. So far only 18.5 billion rubles worth of guaranteed loans have been acknowledged. That is only 11% of 168 billion,” he said.

“It is almost August, but the indicator is very modest. Let us see what we need to set this formula in motion,” he said, noting that formula had been approved by the servicemen and the defense sector as reasonable and acceptable.

Putin also demanded that the Defense Ministry and defense plants must report the signing of defense contracts before the end of summer.

“I demand a joint report to the government before August 31,” he said.

The priority must be given to local producers, Putin said. “Certainly, we give the priority to local producers in buying armaments and military hardware. However, these products must be modern, competitive and reasonably priced,” he said.

A record sum was allocated for defense procurement this year, Putin said. “An unprecedented sum of 750 billion rubles has been assigned for the acquisition and modernization of armaments and military hardware and defense research and development. Modern Russia has never assigned 750 billion rubles for this purpose before. This is 1.5 times more than the allocations of 2010,” he said.

The funds must be spent efficiently, he said. “The government expects efficient spending of these funds for improving the quality of work done by the defense sector and the state clients,” he noted.

There was another conference on defense procurement on Thursday. The situational center of Presidential Representative to the Siberian Federal District Viktor Tolokonsky in Novosibirsk hosted the event attended by Serdyukov, First Deputy Chairman of the Governmental Military Industrial Commission Yuri Borisov, General Staff Chief Gen. Nikolai Makarov, Deputy Defense Minister Dmitry Bulgakov and defense plant heads.

This year’s defense procurement has a value of 750.4 billion rubles, which is 1.5 times more than in 2010, Serdyukov said at the conference.

“The delivery of modern armaments and military hardware to the Armed Forces is under constant control of the national government,” the minister said, adding that a number of defense contracts had been placed within the past two weeks.

“The budget assigns 581.5 billion rubles for RD, acquisition and repairs of armaments and hardware. Together with about 168 billion rubles in state guaranteed loans, the sum is 750.4 billion rubles, which is more than 1.5 times larger than last year’s defense procurement [about 475 billion rubles],” Serdyukov said.

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