Managing the cost of products of defense and other strategic enterprises
The economic stagnation in 2016 revealed a sharp discrepancy in the government on the defense budget: the financial wing of the government insists on its reduction, and the power block - on its increase. Each side has its own objective arguments, but in all discussions an important aspect is often omitted - the formation of prices for the GOZ, which largely determines the country's defense budget. Improving cost effectiveness is the only way that can satisfy all government officials.
The most effective pricing system of the state defense order is the most efficient in terms of spending, but at the same time the socially responsible organization of production and the development of the country's defense potential. Certainly, besides the military industrial complex, the spheres that should have a similar organization include Cosmos, Nuclear power engineering, and any other sphere of strategic importance, but at the same time, not directly related to the sphere of mass consumption. As a result, it will be logical to call this area of the economy - the area of strategic pricing.
Basics of strategic pricing.
The fundamental principles of forming the price of strategically important industries are by their nature connected with the fundamentals of the state’s life, and, accordingly, must proceed from an ideological basis. But due to the visual inconsistency of the existing political theories and the course of our country towards socialism in the framework of capitalism, it will be logical to look for a solution in a universal formula, which, given a certain set of input data, will adapt to any ideology.
Of course, pricing is the domain of capitalism. In the absence of market-based forms of interaction, pricing turns into a summary calculation of the need, expressed in kind (from materials to labor intensity). The difference lies in the fact that each element of such a calculation does not have a single equivalent, which is a unit of currency in capitalism. Despite the fact that the consolidated need is expressed in natural form, it is a “pure” set of necessary elements, which without a complex matching system is not capable of reflecting the cost of the object being priced. That is, without a special system, compare the costs of an object from 10 kg. titanium, 2 man hours and an object from 10 liters of water and 3 man hours is not possible. In this case, the advantage of capitalism is that the market itself forms an objective criterion for estimating costs. Such a system with ease, for example, compares the cost per hour of working time of an engineer and one liter of water. In a market economy, such a description seems natural, logical, and even primitive. But under the conditions of socialist and communist variations, without an adequate comparison of costs in monetary units, a natural set of costs leads to the inappropriate use of precious metals, the creation of unnecessarily expensive machines and other distortions in the system. However, it is also worth noting that under capitalism, the pricing system also has its own “ideological” flaws, for example: the lack of state control of the market leads to a hypertrophied composition of costs, due to the overvaluation of profits by monopolists and market speculations. And no matter how liberalism and capitalism would not try to prove the existence of the “invisible” hand of the Market, such a statement is akin to “from each according to his ability, to each according to his needs” under socialism. In practice, we see a significant dominance of monopolists in the state order market, and speculative markets have a significant pressure on the economies of countries. Due to the absence of such an “invisible hand”, a real, by no means a market, “state” hand must act. Thus, the most optimal strategic pricing system should be based on market baseline data, but using non-market forms of control.
Here another difficulty arises - the difficulty of maintaining the balance of control and market freedom. To maintain a balance, it is necessary to determine the equilibrium point at which the most objective market prices are formed, and hence the picture of costs. Objectivity, achieved by dynamic proportions. With a large number of monopolists, a more stringent control system is needed, with a relatively small number of monopolies, respectively, less.
The market is not static, which means that the equilibrium point and market control should not be static either. Building a flexible regulatory system of monopolists is a necessary condition for creating an objective picture of costs. There are also simpler, but at the same time less effective, but simple ways to control the market, for example, such as "limiting profits." Such a measure contradicts the essence of the creation of enterprises - the extraction of income, significantly reduces the potential for the development of private capital, but due to the macroeffect also reduces the cost of strategic pricing objects. In reality, the scenario of legislatively limiting the profits of private companies is unlikely. If we narrow the scale and focus on the pricing of strategic objects, then such profit control and other types of control are possible only in the case of deliveries within the framework of government orders, thereby not restricting the right of private capital to profit. But, even having created such a system, another nuance appears: the involvement of monopolists in the fulfillment of state orders. And if the adoption of pricing rules in the framework of the state order for ordinary commercial companies is a voluntary action, then monopolists must be forced to engage. It is necessary to make a reservation that for such an approach the definition of a Monopolist is essential, since otherwise no supplier will be interested in obtaining this label. Mandatory coercion of a monopolist is an obligatory measure, since the State order risks being left without a single supplier of certain services / products, due to its likely reluctance to reduce the margin.
Thus, in order to get the most effective cost (in this case, efficiency is determined by a relatively equal economic benefit for all: profit for contractors and suppliers and savings for the customer), the approach should not be limited to one of the ideologies. At the same time, in order not to interfere in the main economic and ideological processes of the country, it is advisable to create a separate market for state orders, access to which is given by the consent of enterprises (taking into account the obligatory attraction of monopolies) to certain rules of the “game” that will not allow one to receive super profits from government orders. The only exception should be monopolists, which, for the above reasons, should be forced to attract.
Practical implementation.
The system proposed below is intended for a wide range of objects, the cost of which is subject to structuring and control. First of all, we are talking about expensive infrastructure, space objects and the state defense order.
Today, within the framework of the Russian legislation, the pricing control in the field of the State Defense Order is more or less adequately functioning, while its chaotic order, the absence of a unified methodology, and the complete absence of fixed financial responsibility should be noted. In fact, the complex of the legislative base of the GOZ is reduced to the fact that it gives the State Contract special conditions of execution, thereby limiting the possibilities of the performers (in terms of profit, cost structure, terms of execution, etc.).
A significant disadvantage of this approach is that the complex of these legislative acts does not create a full-fledged unified regulatory environment for suppliers and performers, since the performance of the GOZ, in fact, is voluntary, which creates the risks of attracting enterprises necessary for the GOZ. Of course, attempts are being made to solve this problem: for example, a mandatory list of state defense order cooperation has been created. But even such a measure is extremely conditional. So, at the design stage, it is impossible to determine the full list of the equipment supplied, which means that it is impossible to determine the full list of cooperation.
Therefore, first of all, to change the approach to lawmaking in the framework of strategic pricing, including the state defense order. It is necessary to create an environment of possible suppliers and performers, despite the contracts. If an enterprise wants to participate in state orders, it is obliged to enter into an agreement with the relevant department in advance and for a long term.
The second thing to note is that all the above documents do not have a single logic.
Thirdly, in all the above documents, there are no explanations for many important terms used. So, it has not yet been determined who exactly is the co-executor by the state defense order.
In other words, is the supplier of the shovels a co-contractor for the GOZ, if he supplies them for submarines, or not? If it is, then a huge number of obligations are imposed on it, including, for example, it needs to conclude an agreement with an authorized bank, obtain accreditation at the military representation, and also open an account from which the costs for manufacturing submarine shovels will be written off. In their right mind and solid memory, of course, no one would ever think of that. To resolve and not to exacerbate the confusion in the regulatory documents, it is necessary to understand the reasons for its occurrence.
Short historical reference
As noted earlier, under socialism it is difficult to talk about pricing as such. However, at the beginning of 90, when it was finally clear that the country was moving in the direction of a market economy, various regulations were enforced, for example, “Regulations on the composition of costs for production and sales of products ...” But this was a “test”, This legislation had more 15 revisions. A more or less distinct result of the legislative fermentation was the Order of the Ministry of Economy of the Russian Federation from 18 December 1997, No. 179 “On approval of the Instruction on the formation of contractual (contractual) wholesale prices ...”. In essence, this document determined the vector of further development of pricing in Russia.
At the beginning of the 00s, very little attention was paid to pricing, due to the relatively small volume of government orders. But by the end of the 00s, when the situation in the economy and the political situation began to change, it was decided to follow the targeted spending of funds, especially in connection with the sharply increased state defense order. At the time of the infusion of money into the state defense order, instruction No. 179 was in effect, which determined all the rules for processing and calculating prices. Despite the various rational approaches that determined the pricing rules in the industry, the instruction was incomplete and simplified. As a result, due to the great attention to the economic performance of contracts within the framework of the state defense order, it was decided to create a new separate legal act. But in a country where pricing cadres were never trained for strategic industries, and the relevant institutions either lost their qualifications or faded into the background, this task met natural obstacles in the form of lack of competences. So the process went by trial and error, which led to the situation that we have now. By the way, an additional problem was the fact that most of the people who created the new regulatory documents did not have experience in production. Thus, as part of the state defense order, as of 2016, we have 4-5 legal guidelines (forms) for calculating prices for the state defense order, which certainly misleads not only enterprises, but also customer representatives, who are obliged negotiate prices. The lack of an integrated approach, uniformity and uniform logic, an ineffective control system, vague wording - this and much more is the essence of the pricing problem today.
Summarizing, we can single out the main aspects of creating an effective system for managing the cost of products of defense and other strategic enterprises:
1. Creation of a single normative act that would determine the composition of costs, the methodology and forms of calculation, the procedure for agreeing on prices, the rights and obligations of the control body. Consolidation of all strategic pricing rules in one document.
2. Creation of a law on the rules of the "game" in the case of the execution of contracts within the framework of strategic industries. (Today, an attempt to create such rules has been reduced to the creation of special accounts for each contract under the state defense order, which in its own way does not increase the transparency of calculations, but additionally burdens the performers)
3. Creation of a law on responsibility for cost planning and targeted spending of funds through the State Defense Order and other objects of strategic pricing.
4. Creation of a unified information system with the functions of automatic procurement control, monitoring, as well as a wide range of opportunities for analytics based on the forms and methodology defined by the Unified Law.
The most effective pricing system of the state defense order is the most efficient in terms of spending, but at the same time the socially responsible organization of production and the development of the country's defense potential. Certainly, besides the military industrial complex, the spheres that should have a similar organization include Cosmos, Nuclear power engineering, and any other sphere of strategic importance, but at the same time, not directly related to the sphere of mass consumption. As a result, it will be logical to call this area of the economy - the area of strategic pricing.
Basics of strategic pricing.
The fundamental principles of forming the price of strategically important industries are by their nature connected with the fundamentals of the state’s life, and, accordingly, must proceed from an ideological basis. But due to the visual inconsistency of the existing political theories and the course of our country towards socialism in the framework of capitalism, it will be logical to look for a solution in a universal formula, which, given a certain set of input data, will adapt to any ideology.
Of course, pricing is the domain of capitalism. In the absence of market-based forms of interaction, pricing turns into a summary calculation of the need, expressed in kind (from materials to labor intensity). The difference lies in the fact that each element of such a calculation does not have a single equivalent, which is a unit of currency in capitalism. Despite the fact that the consolidated need is expressed in natural form, it is a “pure” set of necessary elements, which without a complex matching system is not capable of reflecting the cost of the object being priced. That is, without a special system, compare the costs of an object from 10 kg. titanium, 2 man hours and an object from 10 liters of water and 3 man hours is not possible. In this case, the advantage of capitalism is that the market itself forms an objective criterion for estimating costs. Such a system with ease, for example, compares the cost per hour of working time of an engineer and one liter of water. In a market economy, such a description seems natural, logical, and even primitive. But under the conditions of socialist and communist variations, without an adequate comparison of costs in monetary units, a natural set of costs leads to the inappropriate use of precious metals, the creation of unnecessarily expensive machines and other distortions in the system. However, it is also worth noting that under capitalism, the pricing system also has its own “ideological” flaws, for example: the lack of state control of the market leads to a hypertrophied composition of costs, due to the overvaluation of profits by monopolists and market speculations. And no matter how liberalism and capitalism would not try to prove the existence of the “invisible” hand of the Market, such a statement is akin to “from each according to his ability, to each according to his needs” under socialism. In practice, we see a significant dominance of monopolists in the state order market, and speculative markets have a significant pressure on the economies of countries. Due to the absence of such an “invisible hand”, a real, by no means a market, “state” hand must act. Thus, the most optimal strategic pricing system should be based on market baseline data, but using non-market forms of control.
Here another difficulty arises - the difficulty of maintaining the balance of control and market freedom. To maintain a balance, it is necessary to determine the equilibrium point at which the most objective market prices are formed, and hence the picture of costs. Objectivity, achieved by dynamic proportions. With a large number of monopolists, a more stringent control system is needed, with a relatively small number of monopolies, respectively, less.
The market is not static, which means that the equilibrium point and market control should not be static either. Building a flexible regulatory system of monopolists is a necessary condition for creating an objective picture of costs. There are also simpler, but at the same time less effective, but simple ways to control the market, for example, such as "limiting profits." Such a measure contradicts the essence of the creation of enterprises - the extraction of income, significantly reduces the potential for the development of private capital, but due to the macroeffect also reduces the cost of strategic pricing objects. In reality, the scenario of legislatively limiting the profits of private companies is unlikely. If we narrow the scale and focus on the pricing of strategic objects, then such profit control and other types of control are possible only in the case of deliveries within the framework of government orders, thereby not restricting the right of private capital to profit. But, even having created such a system, another nuance appears: the involvement of monopolists in the fulfillment of state orders. And if the adoption of pricing rules in the framework of the state order for ordinary commercial companies is a voluntary action, then monopolists must be forced to engage. It is necessary to make a reservation that for such an approach the definition of a Monopolist is essential, since otherwise no supplier will be interested in obtaining this label. Mandatory coercion of a monopolist is an obligatory measure, since the State order risks being left without a single supplier of certain services / products, due to its likely reluctance to reduce the margin.
Thus, in order to get the most effective cost (in this case, efficiency is determined by a relatively equal economic benefit for all: profit for contractors and suppliers and savings for the customer), the approach should not be limited to one of the ideologies. At the same time, in order not to interfere in the main economic and ideological processes of the country, it is advisable to create a separate market for state orders, access to which is given by the consent of enterprises (taking into account the obligatory attraction of monopolies) to certain rules of the “game” that will not allow one to receive super profits from government orders. The only exception should be monopolists, which, for the above reasons, should be forced to attract.
Practical implementation.
The system proposed below is intended for a wide range of objects, the cost of which is subject to structuring and control. First of all, we are talking about expensive infrastructure, space objects and the state defense order.
Today, within the framework of the Russian legislation, the pricing control in the field of the State Defense Order is more or less adequately functioning, while its chaotic order, the absence of a unified methodology, and the complete absence of fixed financial responsibility should be noted. In fact, the complex of the legislative base of the GOZ is reduced to the fact that it gives the State Contract special conditions of execution, thereby limiting the possibilities of the performers (in terms of profit, cost structure, terms of execution, etc.).
A significant disadvantage of this approach is that the complex of these legislative acts does not create a full-fledged unified regulatory environment for suppliers and performers, since the performance of the GOZ, in fact, is voluntary, which creates the risks of attracting enterprises necessary for the GOZ. Of course, attempts are being made to solve this problem: for example, a mandatory list of state defense order cooperation has been created. But even such a measure is extremely conditional. So, at the design stage, it is impossible to determine the full list of the equipment supplied, which means that it is impossible to determine the full list of cooperation.
Therefore, first of all, to change the approach to lawmaking in the framework of strategic pricing, including the state defense order. It is necessary to create an environment of possible suppliers and performers, despite the contracts. If an enterprise wants to participate in state orders, it is obliged to enter into an agreement with the relevant department in advance and for a long term.
The second thing to note is that all the above documents do not have a single logic.
Thirdly, in all the above documents, there are no explanations for many important terms used. So, it has not yet been determined who exactly is the co-executor by the state defense order.
In other words, is the supplier of the shovels a co-contractor for the GOZ, if he supplies them for submarines, or not? If it is, then a huge number of obligations are imposed on it, including, for example, it needs to conclude an agreement with an authorized bank, obtain accreditation at the military representation, and also open an account from which the costs for manufacturing submarine shovels will be written off. In their right mind and solid memory, of course, no one would ever think of that. To resolve and not to exacerbate the confusion in the regulatory documents, it is necessary to understand the reasons for its occurrence.
Short historical reference
As noted earlier, under socialism it is difficult to talk about pricing as such. However, at the beginning of 90, when it was finally clear that the country was moving in the direction of a market economy, various regulations were enforced, for example, “Regulations on the composition of costs for production and sales of products ...” But this was a “test”, This legislation had more 15 revisions. A more or less distinct result of the legislative fermentation was the Order of the Ministry of Economy of the Russian Federation from 18 December 1997, No. 179 “On approval of the Instruction on the formation of contractual (contractual) wholesale prices ...”. In essence, this document determined the vector of further development of pricing in Russia.
At the beginning of the 00s, very little attention was paid to pricing, due to the relatively small volume of government orders. But by the end of the 00s, when the situation in the economy and the political situation began to change, it was decided to follow the targeted spending of funds, especially in connection with the sharply increased state defense order. At the time of the infusion of money into the state defense order, instruction No. 179 was in effect, which determined all the rules for processing and calculating prices. Despite the various rational approaches that determined the pricing rules in the industry, the instruction was incomplete and simplified. As a result, due to the great attention to the economic performance of contracts within the framework of the state defense order, it was decided to create a new separate legal act. But in a country where pricing cadres were never trained for strategic industries, and the relevant institutions either lost their qualifications or faded into the background, this task met natural obstacles in the form of lack of competences. So the process went by trial and error, which led to the situation that we have now. By the way, an additional problem was the fact that most of the people who created the new regulatory documents did not have experience in production. Thus, as part of the state defense order, as of 2016, we have 4-5 legal guidelines (forms) for calculating prices for the state defense order, which certainly misleads not only enterprises, but also customer representatives, who are obliged negotiate prices. The lack of an integrated approach, uniformity and uniform logic, an ineffective control system, vague wording - this and much more is the essence of the pricing problem today.
Summarizing, we can single out the main aspects of creating an effective system for managing the cost of products of defense and other strategic enterprises:
1. Creation of a single normative act that would determine the composition of costs, the methodology and forms of calculation, the procedure for agreeing on prices, the rights and obligations of the control body. Consolidation of all strategic pricing rules in one document.
2. Creation of a law on the rules of the "game" in the case of the execution of contracts within the framework of strategic industries. (Today, an attempt to create such rules has been reduced to the creation of special accounts for each contract under the state defense order, which in its own way does not increase the transparency of calculations, but additionally burdens the performers)
3. Creation of a law on responsibility for cost planning and targeted spending of funds through the State Defense Order and other objects of strategic pricing.
4. Creation of a unified information system with the functions of automatic procurement control, monitoring, as well as a wide range of opportunities for analytics based on the forms and methodology defined by the Unified Law.
Information