26/7 Tass 325
LEININGRAD REGION, July 26 (Itar-Tass) —— Prime Minister Vladimir Putin has ordered an investigation into excessive prices of defense products.
“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 at the Tuesday meeting on defense procurements.
“We must find a way to change the situation,” Putin added.
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.
“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 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.