Too many subcontractors cause overpriced weapons

The overpricing of military equipment has been caused by the excessive number of subcontractors in the Russian defense industry, Deputy Defense Minister Mikhail Mokretsov said on Thursday.

“In reality, a contractor deals only with logistics and doesn’t have anything to do with production,” Mokretsov said at a round table discussion on Russia’s defense orders.

The deputy defense minister also said the defense companies are unable in most cases to justify cost breakdowns.

“For example, they could initially claim that a common metallic mooring berth costs 134 million rubles [about $4.8 million], but after negotiations reduce the price by 34 percent and won’t explain why,” he said.

Earlier this year the Defense Ministry said it had failed to conclude contracts worth around 108 billion rubles ($3.85 bln) or 18 percent of the overall 2011 state defense procurement budget, due to soaring prices for military products.

President Dmitry Medvedev called on the Defense Ministry on Tuesday to scrutinize every contract to make it as transparent as possible and speed up the signing of remaining arms contracts in line with the 2011 defense order.

He also said the ministry should consider buying foreign military equipment if domestically produced gear is overpriced.

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