Procurement: Russia Tries The Sit Down


December 24, 2013: Russia has taken another bold step in trying to deal with its inability to produce competitive weapons and military equipment. The latest move is to hold regular meetings between senior military and procurement officials and the most senior (as in president Putin himself) government officials. These frank discussions will let the top government officials know what problems are being encountered in the defense bureaucracy and the defense industries and what can be done to fix it. On the down side the senior defense and procurement officials will be fined and otherwise censured for failure to achieve goals agreed upon at these meetings.

The government is also increasing corruption investigations and prosecutions in matters of defense procurement. One of the goals of all this is to eliminate growing dependence on foreign suppliers of weapons and military equipment. Aside from the project to buy and build French Mistral class amphibious ships, all other foreign procurement deals are being cancelled or sharply scaled back. Russian leaders are willing to do whatever it takes to get Russia competitive again when it comes to developing and building weapons. 

All this is because 2013 has been a very disappointing year for military procurement. The latest disaster was the September admission that their ambitious new warship building program may take up to five years longer. This was an embarrassing admission because a major navy modernization effort is underway and that includes new equipment and facilities as well as weapons.

New base construction is continuing in the Black Sea (at Novorossiisk, as an alternative to the old Soviet base of Sevastopol that is rented from Ukraine), the north coast (for the new Borei and Yasen class nuclear subs), and the Pacific (for the two new Mistral class amphibious ships). Dozens of new ships are on order and the navy is on schedule to complete the current modernization plans after another decade of effort if the promised money keeps coming.

Money is not the big problem. The inability of the Russian defense industry, especially the ship yards to perform and do so on schedule is. This problem is not a secret, the extent of it, however, is generally unkn0wn. The public got a hint back in 2010 that something was very wrong. Back then the government announced its decision to buy four Mistral amphibious assault ships from France. This was just the beginning as the Russian Defense Minister made it clear that Russia would seek more Western weapons and military equipment because Russian firms were not able to deliver the kind of weapons and equipment the military was asking for. Russia was planning to spend over $600 billion in the next decade to replace aging Cold War gear. The Defense Ministry insisted that the Mistral deal was but the first of many. Russia already had an agreement with Israel to build a factory in Russia to build Israeli UAVs under license. Similar deals were made with other Western suppliers for armored vehicles from Italy and various bits of technology from other Western nations. All this is being put on hold or cancelled, except for the Mistral deal.

The problems with the Russian defense industry are many. They include a shortage of skilled workers and competent managers as well as corruption, very poor quality control and a tradition of ignoring complaints from users. Changing these Soviet era habits has proved extremely difficult. There are simply too few competent Russian managers (in general) and fewer still willing to work in the defense industries. Same deal with skilled workers. Even during the late Soviet era the defense industry was regarded as a refuge for over-paid and corrupt incompetents. Imposing Western ideas like warranties and financial controls didn't work. The warranties were not honored and the financial controls were seen as an interesting challenge to officials not a new tool to aid management. Thus the new tactic of holding senior level meetings may only serve to get the bad news to the top brass more quickly.





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