Military Review

“We would not like to be alone with the defense industry”

Deputy Defense Minister Yury Borisov on pricing, military factories and the future of Oboronservis

The new leadership of the Ministry of Defense has begun to rid the army of unusual functions. In an interview with Kommersant correspondent IVAN SAFRONOV, the Deputy Minister for Armaments, YURY BORISOV, spoke about the fate of Oboronservis holding and its repair companies, explained why the military did not want to solve pricing issues in private with defense industry enterprises, and also agreed with the plans of the Ministry of Finance on the transfer of part of the expenses of the state armament program for the period after 2016.

“We did not impose this function on the industrialists”

- You are preparing the transfer of Oboronservis repair plants to the defense enterprises. Many of the factories in the holding have multibillion-dollar turnover. What is the logic of this decision?

“Today, all repairs require very high qualifications and the availability of appropriate parts, which are manufactured by industrial enterprises. There is, as a rule, aggregate repair. Therefore, we would like to transfer the functions in the first place, and then to transfer the assets of the repair plants. We would not like to leave the function of the Ministry of Defense for medium and major repairs, especially repairs with modernization.

- Почему?

- We consider this a function of industry. Only she can competently, efficiently carry out these types of repairs. Any man in the street, having bought a foreign car, tries to carry out repairs in a specialized service organization, and not from a private trader. And certainly not with a hammer. The technique becomes complicated, the current repair and maintenance is generally a separate topic. We will not send equipment for oil change to the factory, driving it hundreds of kilometers away. Now repair units will be restored to the troops, which over the past five to six years have been destroyed. We will saturate them with the necessary spare parts, consumables, which in recent years have not been actually purchased.

- In such a system of coordinates will the role of Oboronservis fall?

- Yes, I can speak frankly about this. Today, there are 131 enterprises in the structure of Oboronservis in three subholdings that carry out repairs and primary maintenance - Aircraft Repair, Spetsremont and Remvooruzhenie. Almost 32 thousand people. For example, “Aircraft Repair” includes 39 enterprises. They are repairing aviation equipment, aircraft, helicopter equipment, engines. Among these enterprises, we proposed that specialized industrial structures such as Oboronprom (includes the United Engine Corporation and the Helicopters of Russia holding. - Kommersant), the United Aircraft Corporation and Almaz-Antey concern conduct an audit and consider the possibility pick up these features along with assets. Back in December 2012, they conducted an audit and based on its results said: “Yes, we are ready to take on the repair function if you transfer these assets to us.” Out of the three subholdings, we selected the first 40 enterprises for transfer. And this was not an imposed service, but rather an agreement with industry: during the period of the technical audit, they went to the field, looked at the state of fixed assets and the economy of enterprises. It was a conscious choice.

- Having transferred 40 enterprises, will you go further?

- We would like to continue this practice, because here you cannot make half-hearted decisions. Either give everything or keep everything at home. We intend to continue this process with industry.

- There are a lot of difficulties?

- Of course there is. Different state of enterprises: someone is stable, someone is unprofitable, someone needs to be restructured and, perhaps, even liquidated. The questions are complex, and it would not be entirely correct to transfer all these problems to industry. We would like to understand this process ourselves or with their help, handing them working assets.

- Did Oboronservis enterprises often break contract terms?

- This is the reason why we began to look intently at this problem. In 2011, the first year of the state armaments program began: multi-billion three-year contracts were signed with "Spetsremont", "Aviaremont" and "Remvooruzhenie" for the repair and maintenance of equipment. In fact, their obligations were rather vague. A repair plan was drawn up, the equipment was transferred, and these sub-holdings repaired only what they could repair. Somewhere concluded contracts with the industry, if agreed on prices. And somewhere they didn’t enter, having moved the repair of equipment for later. What we got in the end? The coefficient of combat equipment as a result of such work has fallen sharply, the number of equipment that should be returned from repair has decreased. We have concluded contracts, having improved them practically on 100%! At the same time, in two years, on average, 20% of the equipment was lost, which was transferred for repair. This applies to ships, ships and submarines, and especially strategic aviation - there is a generally critical situation there.

- “Kommersant” wrote that your initiative was opposed by the Aviaremont trade union. How will this issue be resolved?

- I met with Aviaremont trade union leader Vladimir Kaloshey, and we tried to remove all the worries and risks. Trade unions are concerned about the possible infringement of the rights and social security of workers. We analyzed the situation and came to the conclusion that it should be even better. After all, the need for repairs will still remain, wherever the enterprises are located - in Oboronservis or somewhere in industry. The funds incorporated in the state armaments program are growing from year to year. This is the economic basis for the fact that all these people working in the subsidiaries of Oboronservis will be in demand.

- What will be the benefit of the military factories?

- If military repair plants fall into integrated structures such as the United Aircraft Building Corporation or the United Shipbuilding Corporation, then they are subject to the Federal Target Program for the Development of the Military-Industrial Complex to the 2020 of the Year. In fact, they can claim for budgetary support for the technical re-equipment of their production assets - from the Ministry of Defense this is quite problematic.

- And it's all?

- No. For example, during the transfer of factories, ties are immediately shortened to organize the supply of spare parts. Who makes parts? Industry. And then someone wants it or does not want it, they will solve all price issues themselves within the framework of their integrated structures. We did not impose this function on the industrialists; we did not impose these assets. We met several times together, and I asked: "Can you handle it?" All almost unanimously declared that it was economically profitable for them: after all, after-sales service and repair during operation, as at one of the stages of the life cycle, sometimes actually gives two initial prices for a product. It is a fact! They bought a tank for 50 million rubles, and it should serve in the army for 20 years. Maintenance, repairs during this period will cost as two new tank. This is a very profitable article for business.

- What will happen to the assets of Voentelecom OJSC?

- It is a specialized organization that deals with the maintenance and operation of the complex network of communications of the Ministry of Defense. We will not send it anywhere.

- wait for reorganization?

- Maybe. Voentelecom has several connected repair shops.

- And they are planned to be transferred somewhere?

- May be. But, first, these plants are used by Voentelecom itself for the repair of communication and control equipment in the interests of their operator activities. They carry out scheduled repairs. Therefore, the question here remains open. Here the main principle is “do no harm”.

“We can only guess how much it costs.”

- Both you and Sergey Shoigu said that you want to distance yourself from pricing issues. Already have an understanding who could take on these functions?

- We will not be able to get away from this issue completely, since we will still conclude contracts directly with industry. The motivation for our proposal was different: I do not want to be left alone with the military-industrial complex on pricing issues. The state arms program has high-tech, expensive products with a long manufacturing cycle - such as weapons and military equipment fleet. Let’s take a look at the development and serial production of strategic missile carriers such as Borey or multipurpose submarines Ash. With a long ten-year planning, we envisage the purchase of products with the price that we will be guided by today, tomorrow, the day after tomorrow, in five and in ten years. It is important here not to make a mistake in the maximum price limit of a product. If today we plan to build a prototype of a strategic boat with a deadline of 2018, we need to correctly predict and put that indicative price into the state armament program so as not to be mistaken. If we made a mistake and contracted all this for the price that we first determined, and then industry managed to prove to us that the price really should be higher, then the question arises: what to do? Industry will ask for money. Where will we get them? Alternatively, we will be forced to refuse other purchases, jeopardizing the implementation of the entire state program. A mistake in strategic planning can be very expensive.

We would not like to be alone with the industry when planning the next state armaments program, and single-handedly determine the cost characteristics of a product. Our task is to issue the technical parameters of the equipment that we are interested in during this planning period, to determine the timing of its delivery and quantity.

- And to lay the price reference?

- Honestly? We can only guess how much it costs. We have experience of ordering in previous years and information on the cost of similar equipment in the global arms market. But we only know about it. Determining the price of products depends on many factors: on the readiness of the industry, the availability of scientific and technical reserves, production capacity, real labor intensity, prices for materials and components.

You do not forget that the industry receives funds from the Ministry of Industry and Trade for the development of a scientific and technical reserve for the defense-industrial complex development program - there part of the funds goes to the development of critical and basic technologies. The main flow of funds goes to the technical re-equipment. So, in theory, we should constantly know that in a particular enterprise is changing, what is the complexity. Is this our function? Not. Then it is necessary to keep the staff and constantly monitor what results have been given by the technical re-equipment of the defense complex development program. But we do not want to do this! In fact, there have always been industry institutes in industry that calculated the real labor intensity of a particular operation. So it was all my life. Therefore, we believe that determining the maximum maximum contract price, that is, under what conditions and for what money the industry can take this or that measure of the state armaments program for implementation, they should be responsible. Then the risks will be excluded. When the president signs the new state armament program before 2025, we will begin to contract it. If a company enters the competition or is determined by the sole executor of the order, comes to us and says: “Listen, I will not do this price”, I can answer: “Walk to your department and agree. We have no other money. ”

- Do not you think that it is necessary to develop some method of determining the cost of production?

- Good practice was still in the Ministry of Industry and Energy with the 200 order. He was once registered with the Ministry of Justice and carried the norm of a document of an interdepartmental nature, which was mandatory for the execution of all. For seven years, the order determined the composition of the costs that make up the cost of production. In recent years, the Ministry of Defense has ceased to be guided by this order. This is mistake. We now need the same rules of the game, so that we accept them, and the industry.

- After 2015, will there be some kind of revision towards increasing or decreasing the number of contracts?

- Contracts concluded in accordance with 94FZ do not provide for a price revision procedure, it is possible to adjust within 10% when the scope of work changes. But now we are talking about amounts significantly exceeding 10%. Apparently, if enterprises prove to us that contracts cannot be executed, we recognize that this is a strategic planning error. We will simply be forced to admit it and break the contract and renegotiate the contract at a new price.

- Is it possible to talk then about reducing the amount of purchased serial products? For example, the refusal of the Borey missile carriers.

- There are positions that we can not reduce, they determine the promising appearance of the weapons system of the armed forces. The number of "Boreev" definitely will not be revised, Like the "Ash." We will have a very difficult task, we will have to pursue the rest of the nomenclature, somewhere to save something, somewhere to give up something.

- What is the execution of the state defense order this year? When will he be fully contracted?

- Today a little more 82%. My forecast for this whole procedure in the future: we can manage to contract in the period of June, July, the maximum of August of the order of 93 – 95%. A number of positions just will not be contracted. We will have to correct them in the framework of the specification of the state defense order.

- What is the reason?

- There are a number of reasons. Including there are wines of the Ministry of Defense. There are trivial problems: there is no technical task. That is, we still have not decided on what we need. And when there is no such understanding, then there is no approved technical task. There are objective things. Suppose that a series of some new technology was planned for procurement, and the series is contracted after the completion of development work. Until they are completed, there is no assignment of the letter O1. So the funds planned for the serial purchase begin to shift. We have now met the Ministry of Finance and offer, after a detailed analysis of the industrial and scientific capabilities of the industry, to make adjustments. I'm talking about the transfer of a number of positions in the framework of the 2014 – 2016 state defense order beyond the 2016 line of the year.

- You actually support the requests made by Anton Siluanov. What exactly will you carry?

- Anti-aircraft missile technology of the new generation. There was such a situation that a number of positions related to the development of such complexes went to the right. In this regard, the weapons, previously planned for serial production, also sailed to the right. This is an objective reason for which we will ask the Ministry of Finance to transfer part of the costs. In fact, we will simply return them to the budget with a request to return them to us after 2016, when this development work is completed. We still need these positions to fulfill the state armaments program.

- What amount are we talking about?

- For three years, I think, within 80 billion rubles, maybe a little less than 100 billion rubles.

- And the nomenclature?

- First of all, the development on the themes "Morpheus" and "Vityaz". These are quite complex projects, they really swam a year or two to the right. Were supposed to end in 2011 – 2012, but really ended no earlier than 2014.

- Is the supply of C-500 complexes also shifted?

- And this may be - due to the complexity of the missiles.

- What is your relationship with the Federal Space Agency (Roskosmos.- "Kommersant")? How are contracts made? It is worth remembering all the price wars 2011 of the year, when the general designer of the Bulava, Yuri Semenovich Solomonov, literally fought with the Ministry of Defense for every ruble.

- As for Yury Semenovich Solomonov, then with his cooperation he, in my opinion, lives better than anyone, because the Moscow Institute of Thermal Engineering has been contracted almost to the end of the state armaments program. He only do and do.

If we talk about the space component of the state armament program, then the plans are big. But the state of the space group is problematic. 12 of this year's April was the subject of a meeting in Blagoveshchensk: we had a very serious conversation about the fact that we did not receive the satellites they had to launch in the first two years from Roscosmos. There are a number of shifts in the implementation of the state program to the right. This is a very painful question for us, because we counted on these satellites, planned our actions, built our entire organization activity in the troops.

As for the contractual program, practically everything has been contracted and paid for with Roscosmos. Execution is lame. There are objective reasons, such as the notorious problem of radiation-resistant components. This is a serious question, because it is possible to lose billions due to one chip.

- How is the Angara project being implemented? What does an object look like right now? Will you be able to meet the deadlines?

- We just 27 April signed a new schedule for the implementation of all these activities. If, after a month of signing this schedule, you have to sign that it is impracticable, it must be admitted that we have poor planning, why did we make it then? While there are things and even already in the framework of the implementation of this schedule, which requires more attention. Some positions were apparently incorrectly predicted, and there is a lag. But this is not all about the deadlines. We have certain fixed points there: the completion of autonomous tests of all systems, the transition and the completion of complex tests. Construction work will soon wind down already. Another two or three months, and the builders finish their work.

- And then what will happen?

- Further complex tests will go. But I would still like to take into account that the Russian industry 20 years did not pass such rocket-space complexes, this is a difficult question.

- The question of aviation. A long-term contract has already been concluded for SU-35С. When sign contracts for the MiG-35?

- At the end of June or the beginning of July of this year we have to reach the conclusion of a state contract for the supply of MiG-35С.

- What is the reason for the delay?

- With the paperwork on the definition of RSK MIG sole performer of this task.

“It is not economically feasible to reinvent the wheel alone”

- What is the situation with the formation of the state armaments program to 2025 year?

- We have been carrying out planned work in this direction for the second year. The start of this work was given three years and three months before the start of the proposed implementation.

- None of the last three military state programs did not have a single aircraft carrier. Before 2020, only the development of his project is envisaged. Maybe in the new state program before 2025, a new aircraft carrier will appear?

- This question should be addressed primarily to the Chief of the General Staff and the Commander-in-Chief of the Navy. Russian industry is basically ready to make a serious development. The Krylov Central Research Institute conducted research, we were offered three options for the implementation of an aircraft carrier of various displacement with a very interesting layout. The scientific and technical background and production capabilities of the shipbuilding industry make it possible, even today, to begin implementing a project on an aircraft carrier. I do not exclude that such a position will appear in the state program before 2025.

- In the 2014, the RF Ministry of Defense will receive the first Mistral helicopter carrier, in the 2015-m - the second. What will happen with the construction of the third and fourth ships?

- The problem with Mistral must also be viewed through the prism of the fulfillment of accepted international obligations. There is complete clarity with the first two ships, because a firm contract has been concluded. And therefore, it would even be indecent to discuss their fate; one simply has to keep the word, all the more fixed in the form of obligations. We will bring this development to the end. We have no more obligations, including to the French side. We have only intentions. So give us the opportunity to gain a foothold in the seriousness of their intentions or understand their absence. I think this is a normal practice. Having received the first ships, we will see them in action, we will evaluate, maybe we will make some corrections, maybe we will buy, and maybe we will refuse. This is our legal right.

- Your arrival in the Ministry of Defense is associated with the fact that the emphasis in procurement will be made towards Russian manufacturers. Foreign purchases will be made?

- There will be - for the simple reason that we, excuse me, are no longer living in the Soviet Union and not behind the Iron Curtain. Sometimes it is simply not economically feasible to invent a bicycle here alone. I have always said from all the stands: the export of samples must be opposed to the export of technology. It is necessary to license the best solutions and master, stepping over certain stages of development. If it happened so that we have lagged behind somewhere, it is not shameful to license something, to master it in new capacities, maybe even built in an open field. And thus reduce this lag.

- And what about the contract for armored vehicles Iveco-LMV65. Is it true that you were against the purchase of an additional lot?

- To some extent true. We had firmly contracted 358 armored vehicles. I personally flew to Bolzano and reassured the leaders of the Iveco division, which are engaged in their development. For these cars, the Russian side will fulfill all the commitments. Moreover, we will ask the Italians to make an addition to this contract, because these contracted machines were supplied without spare parts, without repair and service documentation. In fact, we could be in the following situation: we bought them, and after some time they just got up from us.

- Many such examples?

- Not so much. We did not give them a word, did not show a hint about the continuation of those previous commitments that sounded in writing or verbally from the previous leadership of the Ministry of Defense. I am absolutely convinced that the Russian industry is able to produce similar products.

- Cars like "Wolf" and "Tiger"?

- Yes. KamAZ still has interesting offers. If something is not enough for our developers, for example, they do not know how to make a good engine, then license the decision. Licensed by leading manufacturers of automotive giants. They go to these contacts. Do not know how to make gearboxes, license this decision. Do it yourself. Of course, I am a supporter of maximum localization and for the Russian industry to do everything.

- Why, then, the Defense Ministry still does not have a single unmanned aerial vehicle?

- This is a paradox. Before the start of the 90s, Russian industry was probably ahead of everyone in this matter. Subsequently, we all just slept through. And completely unexpected companies, in particular, Israeli companies, which in fact did not bring anything revolutionary into this sphere, became leaders. Simply, they very clearly saw the role and place of unmanned vehicles in future military conflicts and correctly organized the process of their development and production.

- Their advantages are that they fly and do not fall, unlike our developments.

- No, in another. They correctly estimated their capabilities and the entire world cooperation. Do you think Israeli companies make all the components of their UAVs on their own? Yes, in any case. They are engaged only in the final assembly, mathematical software, and all the payload and its individual components are purchased through cooperation in almost all countries of the world.

- Are Russian developments in the interests of the military being conducted?

- There are works on various types of drones for short, medium and long range, including shock. We will not abandon this topic.
Dear reader, to leave comments on the publication, you must to register.

I have an account? Sign in

  1. aksakal
    aksakal 11 June 2013 16: 14
    I liked the interview. In many places you can argue, but in general - this is a good professional. It upsets what he states about the Israelis: "Simply, they very clearly saw the role and place of unmanned vehicles in future military conflicts and correctly organized the process of their development and production.

    - Their advantages are that they fly and do not fall, unlike our developments.

    - No, in another. They correctly assessed their capabilities and the entire world cooperation.
    ", but why don't they work the same way in the Ministry of Defense and the military-industrial complex of Russia? What prevents to organize such a thing? To see a role and place in something new and organize it correctly? Is it so difficult? The main thing is that they see everything from a neighbor, but take and adopt - this is not done. Why7
    1. Grbear
      Grbear 11 June 2013 17: 13

      Everything is simple. Russia is not Israel. All the industrial structures of NATO help him and they have no prospect of confrontation with NATO. Nobody will arm Russia.
  2. Grbear
    Grbear 11 June 2013 17: 15
    In the interview, a lot of space was given to pricing and control over spending. Serdyukov is just a "baby" in this business, who saw the "secret grandmothers" and grabbed what was on top (on which he got burned). But that's another topic.

    Triumvirate: Shoigu, Rogozin and Borisov are a team that seems to understand each other. It is important that the management of the Enterprises has people with a similar approach to problems. Indeed, over the past 20 years, there have been many "ass-managers" at the helm who have sensed money and are ready to rip it up at any cost. One idea - "Conversion of a specialized enterprise" is worth it: if you made a bomb, you can do samovars and ... you did it. That is why it is now easier to liquidate some of the military-industrial complex enterprises and build new ones. The guys' job is damn hard. Success to them.
  3. Russ69
    Russ69 11 June 2013 17: 19
    Quote: aksakal
    Is it that hard? The main thing is that everyone sees from a neighbor, but to take and adopt it - this is not done. Why7

    I heard that at one time Ivanov, being the Minister of Defense, did not see any benefit in drones at all. I will not argue, but I heard.
  4. cartridge
    cartridge 11 June 2013 18: 27
    I am generally upholding Shoigu's decision. The main thing is that all decisions and their consequences are thoroughly thought out. As the saying goes, "Measure seven times - cut once."
    1. nickname 1 and 2
      nickname 1 and 2 11 June 2013 20: 07
      Quote: cartridge
      I am generally upholding Shoigu's decision. The main thing is that all decisions and their consequences are thoroughly thought out. As the saying goes, "Measure seven times - cut once."

      And sayings? Took .... Chickens ..... or just = 9 months.
      The main thing is FRAMES! Where to get them? New ventures?
      We must wait when the teams come together. When will the spices be grown. In short - it takes time! Need stability.
  5. individual
    individual 11 June 2013 21: 53
    I read the publication of Safronov.
    I have other information:
    I read in the newspaper "Argements of the Week"No. 21. for 06.06.13.
    The clerk of the sovereign treasury - Minister of Finance A. Siluanov proposed shift "right" positions of the State Defense Order. "To the right", translated from the bird language of financiers, means "now we won't give you money, and then we won't give you any money either. According to" AN ", Siluanov's position angered Defense Minister Sergei Shoigu. In his entourage, he once again expressed his disappointment that he succumbed to persuasion and came to this post, allegedly he was promised carte blanche for the real, not Serdyukov's, rearmament of the army and navy.
    In 2012, the GOZ was reduced by 25 lard.
    From 2013 to 2015 will be reduced by another 700 billion rubles.
    I support Minister Shoigu in his anger at the scoundrels liberal policy.