Defense industry in 2012 fell short of the target state defense order (SDO) by about 20%

In the beginning of this week the State Duma website published the Accounts Chamber's report on the draft law on federal budget implementation in 2012 which had been placed on the same website on July 11.

The data of the Accounts Chamber sufficiently supplement explanatory materials of the Ministry of Finance attached to a traditionally laconic text of the draft law and, additionally, shed light on circumstances relating to the implementation of the state arms program and state defense order (SDO) in 2012.

For example, a statement on page 215 of the report confirms the fact of additional (to previously know for April) reductions of SDO by the Russian government in October and December of the previous year "for purchase of arms, military and special equipment (AMSE), including ten assignments referred to a top-priority category". This, however, did not help our officials to report the complete performance of these reduced assignments - the report of the Accounts Chamber specifies that "with respect to purchase and repair of AMSE there were shortages of supply under 121 state contracts, including purchases of AMSE under 65 contracts and repair of AMSE under 56 contracts". Out of the total number of research and development projects in the military field 80 were not completed in due time (35 of them were fully paid).

The newly published data of the Accounts Chamber confirm the June statement of Director of Military Representatives of the Ministry of Defense O. Stepanov that in 2012 the Russian defense industry under-delivered to the military forces "about 20% of the military products". At the same time, the relative value of the last-year "short delivery" of SDO coincided, entirely by accident, with the nominal expense growth of the federal budget on "National Defense" item amounting to 19.6% in 2012. Apparently, our industry fails to catch up with the target 15% growth of military products output and the sharp increase in SDO financing not only does not help but rather impedes it, reducing motivation to increase efficiency.

Many reasons of this situation thoroughly listed in the report of the Accounts Chamber lack only one which is, in our opinion, determinant when it comes to implementation of the federal budget: out of 28 federal executive authorities which are the key managers of budgetary funds with respect to national defense expenses, 18 spent those funds only in a secret and top secret manner. The analysis of committed violations was included by the Accounts Chamber in an unpublished top-secret appendix 17.

The inclusion, for the first time since 2008, of an open report on expenses of the federal budget on support of the national defense signed by the auditor of the Accounts Chamber V. Bogomolov in the materials of the report of the Accounts Chamber, which supplemented the principal text considerably, surely came as a nice surprise. However, we find a little puzzling the phrase of the document's author that "expenses on payment of monetary allowance to military servicemen in 2012 grew 2.5-3 times in accordance with the assignment of the President of the Russian Federation on increase of monetary allowance for military servicemen" (p. 5) which is followed by the statement in the next following paragraph that expenses on wages payable to military and civil servicemen in 2012 increased by 13.1%.

In general, the total number of secret and top-secret appendixes to the draft law on implementation of the federal budget itself and to the report of the Accounts Chamber remains at a traditional for Russia level which is an abnormally high for successful development of both the budgetary system and the country as a whole.

V.B. Zatsepin, Candidate of Military Sciences, Head of the Economics of the Military-Industrial Sector Department