Military Review

Planning – programming – budgeting

Today, the national defense industry complex needs a revival of this scheme of work.

On the issue of restructuring and modernizing the country's economy, one of the most important tasks is to create, and in fact restore, large integrated structures destroyed by privatization and conversion of military production.

This course was taken with the adoption in 2001 of the "Fundamentals of the Russian Federation policy in the development of the defense-industrial complex for the period up to 2010 and further perspective", which emphasized the need for deep structural changes and creating a new image of the "defense industry" capable of competing with transnational corporations operating in global markets. However, numerous reforms for a long time did not lead to a significant improvement in the state of defense - the destructive processes of conversion and privatization, as well as established thinking patterns, influenced it so deeply.

The defense-industrial complex is today in a state of resource, structural, technological and personnel crisis. An idea emerged about the defense industry as a purely market subject, the source of development of which supposedly should be competition. The role of the state has been lowered and there are still calls for its further withdrawal from the economy. It was rightly noted that the restructuring itself is carried out under conditions when the value of the state has significantly decreased compared with the management of enterprises working for their owners (most often foreign). This makes the achievement of goals declared by the country's leadership unrealistic, since they often contradict the true goals of the owners and management. It is necessary to divert nonprofessionals from among state officials and allow only competent specialists to enter the economy and defense. Only in this case “smart economy” and “smart defense” are possible.

Planning – programming – budgeting

It should be said about optimizing the structure of expenditures on national defense and security. This process should not be confused with underfunding. If it is not possible to allocate as many funds as the program-target approach requires, then they offer to compensate for the missing allocations by optimizing them. But this gives a different, lower level of security, although in priority areas its decline will be less than in others. Everyone worked to the best of the resources received, but the country's defense capability suffered in some way. Optimization does not compensate for underfunding. You can optimize to the critical values ​​of some types of security.

Four state armaments programs (LG) have been developed and adopted. The first HPV was calculated for 1996 – 2005 years, the second, third and fourth - for 2001 – 2010, 2006 – 2015 and 2011 – 2020, respectively. The first three are not met. The reasons for their failure are diverse. To a large extent, they are associated with the defects in the conversion of the defense industry complex and the loss of its main advantage, system integrity based on state ownership. What follows from this?

"Defense" as a system

The first task is to restore the defense industry complex as a system based on the optimal combination of various forms of ownership, the use of state planning and market technologies. This is not an easy task. The main thing is to make sure that the defense industry is able, to believe and be able to realize them. The most obvious is the revival of the quantitative parameters of the defense industrial complex on the basis of sufficient state financing and private entrepreneurship.

For a long time, substantial underfinancing of state orders made it impossible to invest in the renewal of fixed capital, science and the training of qualified personnel, and also forced to focus on the use of already obsolete so-called modernized weapons. Now, the financing of the defense industry begins to approach the norm, although there is no clear definition of it. In 2011, the volume of the state defense order (GOZ) increased compared to 2000 in 10,5 times (from 71,92 to 751,0 billion rubles), and the share in defense expenditures - from 29,6 to 50 percent. The fourth HPV was approved in December 2010. Its cost is about 20 billion rubles (the third program planned 5 billion rubles), as a result, the share of new weapons in the army should increase from 10 to 70 percent. To compare it with the previous program will help the table.

According to the statistics, there are positive significant shifts. But if the implementation of the HPV-2020 will not be able to get rid of the acquired defects of the first three programs, then it is destined to have the same fate as the previous ones. We must finally determine the rate of the share of defense spending in GDP and in the state budget. The situation with the costs of ensuring national defense and security (weekly MIC, “Russian Economy at the Beginning of the XXI Century”) is alarming, as is the “budget maneuver” proposed in the final report on the results of expert work on current issues of Russia's socio-economic strategy period to 2020 year. It is proposed that by 2014 the volume of additional expenditures in priority areas will be two percent of GDP, including education - 0,15 percent, health care - one percent, road facilities - 0,75 percent, communications and ICT - 0,1 percent. It is proposed to increase these costs by providing savings to 2014 in the total amount of two percent of GDP in the following areas: national defense, national security and law enforcement - 0,9 percent, national expenditures - 0,3 percent, national economy and utilities - 0,8 percent.

At the same time, this maneuver should not consist in reducing budgetary expenditures on defense. This is the wrong way, not only because it will lead to its weakening, but also because it limits the possibilities of restructuring and accelerating the development of the economy. Other ways are needed, including a sharp decrease in the decile coefficient and the cessation of the sterilization of capital.

Plan and Market

An important step is related to organization and management. Analysis of the pros and cons stories the implementation of state defense orders of Russia and other countries leads to the understanding that the Americans came in the second half of the last century to their own PBF system (planning - programming - budgeting), borrowing planning from us. In the Soviet Union, a similar scheme was used in the defense industry. The time has come to revive it by combining the benefits of planned development with market technologies, as is done in the United States. Probably, this is the meaning of the mention by Vladimir Putin of the American DARPA system and the intention to create a special group at the Military Industrial Commission, which will include representatives of the economic bloc of the government, the Ministry of Defense, the Ministry of Finance, the Ministry of Industry and Trade and the Federal Tariff Service. It will also deal with pricing issues, which for some reason does not work “where government money”. Of course, you need to increase financial and purely administrative discipline, but the main thing is system solutions in management, so that trillions of rubles are effectively turned into first-class weapons, military and special equipment and cause a multiplier effect throughout the economy.

It is impossible to implement the program on the existing technological base, it is necessary to modernize it. This is the aim of the Federal Target Program “Development of the defense industry complex of the Russian Federation for the period up to 2020 of the year” Here and the renewal of production, investment in research and development, rejuvenation and skills development. There are funds for the technical re-equipment of defense enterprises - 440 billion rubles. But the cause of the revival of the "defense industry" will not go without active innovation, which is carried out on the basis of the aforementioned Federal Target Program, the federal contract system, as well as the regular State Armaments Program.

A significant role, as in the Soviet period, should be played by the Military-Industrial Commission under the Government of Russia, and the working group of the military-industrial complex on the provision of state defense orders, which included representatives from relevant ministries and departments. This is important for the organization and coordination of the activities of these bodies. New state and municipal procurement procedures should ensure high quality of execution of state orders and prevent the formation of monopoly high prices and multi-billion corruption schemes. In order to counteract corruption, it is proposed to introduce control over the expenses of persons holding public office in the Russian Federation and some posts in the federal public service, in cases where they clearly do not correspond to income. It is particularly important to bring to the logical end the investigations related to corruption and theft of state funds allocated for the GLONASS system, Oboronservis OJSC and other structures established during the period of the military department reform.

Since the military industrial complex is part of the entire industrial complex of the country, it is managed by the Russian government with the participation of many ministries and departments. Its enterprises are mainly financed from federal sources - for the development and production of military hardware and equipment, civilian products for state needs, as well as for the creation and development of a production base in the interests of the implementation of the state program and state defense order. Therefore, speaking of military-economic and military-financial policies, we focus mainly on state policy and state enterprises. However, the ongoing reforms have already significantly increased the share of joint-stock companies (JSC) - private and mixed - in ensuring defense and security. Only 7,8 percent of enterprises are in state and municipal ownership. It is natural that the effectiveness of the economic component of national security depends largely on the private trader, on his participation in innovation and production improvement. But as Elvira Nabiullina, the head of the Ministry of Economic Development, noted at a meeting of the Public Chamber of Russia, only 9,7 percent of these enterprises strive to increase their efficiency through new developments. AOs see their task in making profit, strive to give the army and the fleet that they have been well mastered and do not require additional investment, and the Armed Forces and other security structures want to get a military-technical equipment that meets the world level of technical parameters. How to combine these points of view?

Resolve contradiction

Obviously, the following can be a mutually acceptable elimination of this discrepancy. The Ministry of Defense rightfully demands from manufacturers of high-tech assembly products that meet international standards for weapons and special equipment, but guarantees prices that provide the company with acceptable profitability, for example, as proposed by the defense department, 20 – 25, and in special cases 30 – 35 percent with the condition : the difference (10 percent) to send for technical re-equipment. Naturally, such an agreement should be embodied in a legally defined system.

The state in contractual relations plays a dual role. On the one hand, it is the guarantor of the execution of contracts, on the other - it owns the property and is an equal subject of these relations. Unfortunately, in Russia in this area for public procurement is not yet a special section of contract law. Its basis will be the Federal Law on the Federal Contracting System, which defines the legal basis for the formation of such a system in the field of procurement of goods, works and services, the principles, stages and range of participants, methods of procurement and the conditions for their use. The law regulates relations connected with the forecasting and planning of the provision of state and municipal needs for goods, work and services, the implementation of their purchases for state and municipal needs, monitoring, control and audit over compliance with the requirements of federal law.

The principles on which the federal contract system is based, the criteria it establishes for evaluating the bids (offers) of bidders, the responsibility of the supplier (contractor, performer) and customer for non-fulfillment or improper fulfillment of the obligation stipulated by the contract, will prevent the failures of state armaments programs that Unfortunately, we touched upon the first year of the fourth LG.

It must be assumed that this will create conditions for the most active participation of joint-stock companies and state bodies in the financial and economic provision of defense and security, for public-private partnership, and fair competition in this area. The role of military finance and military financial policy will increase to the level appropriate to their purpose, and military economists, financiers (this profession should be revived) will adequately fulfill their complex and very important mission.

About social justice

The variety of tasks to be solved requires a combination of unshakable will and attentive, interested, careful attitude to all the problems of transformation. For each step, the interests and destinies of the people, the country. Now they are saying that in order to revive the defense industry, it is necessary to close the topic of unfair privatization of the national wealth and restructuring of the defense industry. But how? Forget, forgive or take away, plant? In both cases, a tick will be ticked to close the topic. And what's the point? After all, the crux of the matter is to overcome the main deterrent to development - the lack of social unity of our society and a clearly defined goal that unites it and gives rise to enthusiasm. Otherwise, the point of no return may soon be passed, which may lead to unpredictable consequences. But this cannot be achieved either by oblivion, forgiveness of disgraces and enormous damage caused by the destructive activities of the previous leadership, or by means of “landings”. It is necessary to restore social justice. There are a lot of specific proposals to this effect. The future of Russia largely depends on how this problem is solved.

In conclusion, I would like to emphasize the following: effective reform of the Russian defense industry does not require a purely economic narrow market, but a functional economic economic approach, taking into account the global interest of survival and a reminder of morality of the well-known fable: the trouble is that the cobbler starts the ovens and the pastry boots.

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  1. VadimSt
    VadimSt April 17 2013 07: 07 New
    Key phrase.
    There was an idea of ​​the defense industry, as a purely market entity, the source of development of which supposedly should be competition. The role of the state is belittled and calls for its further departure from the economy are still ongoing.

    And then the price swing, cuts, development, offshore ....
    1. Russian
      Russian April 17 2013 08: 54 New
      That is the point, I believe that the main problem is the state’s withdrawal from this industry! The pancake was pre-privatized, that now to make some kind of high-tech object, you need to make so many all kinds of approvals, a bunch of these subcontractors that are specially made to cut money. Everything is correctly written in the article: in the second half of the last century, the Americans came to their PPB system (planning - programming - budgeting), borrowing planning from us !!! And we, on the contrary, market relations, offshore and other crap! We had plannedness and complete control of the state, and the pace of construction was very impressive, so can we draw conclusions and return to the developed system ?! Although so many things have already been destroyed, of course, and many enterprises are now in other countries, it’s better late than never!
      1. Egoza
        Egoza April 17 2013 12: 17 New
        Quote: р_у_с_с_к_и_й
        We had plannedness and complete control of the state, and the pace of construction was very impressive, so can we draw conclusions and return to the developed system ?!

        All right! By the way, when they announced the transition to a market economy, one Japanese diplomat, whose eyes became square, directly exclaimed: “What are you doing? We in Japan borrowed a planned economy from the USSR and look at what heights Japan has reached!” Well, who listened to him! The tops of the money could not wait to get!
        1. Waterfall
          Waterfall April 17 2013 12: 19 New
          There has never been a clean planned economy a la scoop. The fact that the untrained soviet nomenclature decided to play wild capitalism is another matter.
  2. SPACE
    SPACE April 17 2013 08: 39 New
    Defense and security is the first state task. And that means it should be built not on a market, but on a planned and planned economy. The key enterprises of the military-industrial complex should belong to more than half of the state, and it is the state that should plan the budget for defense and the purchase of military equipment, and should also establish its quantity and cost. There must be accuracy, clarity and stability of the entire defense system throughout the entire time.
    But it is NOT NECESSARY to admire Western technology and to create a hysteria about the backlog of our military-industrial complex and its inability to produce modern technology, because in reality this is not so, and in general it is not a very productive, amateurish approach. Everything will be, everything has its time.
  3. Vtel
    Vtel April 17 2013 15: 31 New
    Analysis of the pros and cons of the history of the implementation of state defense orders of Russia and other countries leads to the understanding that the Americans in the second half of the last century came to their PPB system (planning - programming - budgeting), borrowing planning from us. In the Soviet Union, a similar scheme was used in the “defense industry”.

    Here again we return to our rake, "What we have, we don’t store, we lost, weeping." Meanwhile, the cunning West is using our former best practices.