The Situation Around the State Defense Order

On May 16, by a majority of vote the State Duma supported in the first reading the draft of the new Federal Law on the State Defense Order submitted by the Government on March 6. The Just Russia Party in the State Duma was the only party which refused to support the new law.
Though the new law is meant to replace Law No.213-FZ which has been in effect since 1995, it seems that Yu. Borisov, First Deputy Chairman of the Military-Industrial Commission (MIC) under the Government of the Russian Federation who introduced the draft law to the State Duma failed to identify drawbacks of the effective law and, consequently, provide convincing evidence of the advantages of the new draft law. According to most deputies who took the floor, the above draft law has not been thoroughly developed and remains a framework one, so, in accordance with the existing practice it will be duplicated and detailed by traditional annual resolutions of the Government on securing of fulfillment of the state defense order. However, the Defense Committee of the State Duma believes that the quality of the draft law in question will be upgraded until the second reading after holding of a few round tables and a field meeting in the city of Tula on May 29.

Answering deputies' questions, Yu. Borisov said that the situation in the defense industry had stabilized. He was quoted by RIA Novosti as saying: "a sharp increase in the state defense order has contributed to that in the past three years. At present, the outflow - a reduction in the number of enterprises - has slowed down; earlier it amounted to about 5% to 7% a year. Now, it has stabilized". It is hard to say what statistics the MIC uses in preparation of reports to the State Duma, but according to our data from March 2010 till April 2012 the number of enterprises and entities included in the composite register of enterprises of the military defense complex decreased from 1,729 to 1,353 (or by 21.7% in the past two years).

In addition to that, at the evening meeting of the State Duma held on May 16, amendments to effective Law No.371-FZ on the Federal Budget in 2012 and in the Planned Period of 2013 and 2014 were approved in the first reading. Expenditures on the item: The National Defense grew by Rb 17,569bn to Rb 1,864,173.7 trillion (or by 0.95%), including Rb 2,700bn which was allocated additionally for provision of housing to military servicemen.


At the meeting of the MIC which was held on May 16 too, it was declared that the state defense order for the year 2011 was fulfilled by 96.3%, but "the concrete results regarding the nomenclature and quantitative indices differed from the initial assignments". It would be easier to figure out the extent of such a difference if one remembers that as early as late in January А. Sukhorukov, Deputy Defense Minister admitted that the 2011 defense order failed to be fulfilled under 84 contracts for the amount of Rb 42bn which was equal to fulfillment at the level of maximum 94.2% , that is, in the past three months that KPI grew by 2.1 p.p. which is meant to suggest other achievements of the military-industrial complex yet unknown to us.


V.B. Zatsepin , PhD (Military Science), Head of the Economics of the Military-Industrial Sector Department