Latest on GOZ Woes (Part I)

So much has swirled around the state defense order (Gosoboronzakaz or GOZ) this year that it makes one avoid the topic.  But here’s a shot at making amends for neglecting it. 

Perhaps this information will just precede the next wave of GOZ news, likely to break before the end of August.  The current deadline for putting out GOZ contracts is August 31 (who knows when the weapons and other military equipment being bought will actually be delivered?).

You may recall Prime Minister Vladimir Putin set August 31 as the most recent “last deadline” for placing all GOZ-2011 contracts back in late July.  At that time, Putin pretty much put all blame on the Defense Ministry.  Defense Minister Serdyukov said he would complete the contracting, and report to the President and Prime Minister by the deadline.  The report is supposed to be a joint one reflecting the positions of all players involved in the GOZ.

This very day, BFM.ru reports that Deputy PM Igor Sechin says he’ll be two more weeks negotiating OSK shipbuilding contracts with the Defense Ministry.  He claims three of 13 remaining contracts are being signed today.  Prices for the remaining ten will apparently be specified and agreed over the next 14 days.

According to ITAR-TASS, a VPK source indicated the Defense Ministry still needs to contract with Sevmash for delivery of one Proyekt 885 (Yasen-class) and two Proyekt 955 (Borey-class) submarines this year.  The source said work continues despite the lack of a signed contract.

ARMS-TASS, however, provided the best insight into the current state of play on the GOZ.  The news agency cited Deputy Finance Minister Anton Siluanov on a Putin-led government conference on the GOZ early this week.  Siluanov concluded the Defense Ministry will soon sign its contracts and send out advance payments.  Additionally, he criticized the delays for “breaking budgetary discipline,” and added that defense contracts are being signed on credit schemes and state guarantee mechanisms [i.e. not cash].

ARMS-TASS also quoted Putin at length:

“Naturally, the priority in buying equipment, armaments is, of course, domestic equipment, but it should still be modern, wanted, promising and acceptable to the customer, to the Defense Ministry, but taking account of prices for the state.”

“An unprecedented amount of monetary resources — 750 billion rubles — has been allocated for the purchase and modernization of equipment and armaments, for RDT&E on defense subjects.”

“In modern Russia such money has never been allocated so that in a year there’s 750 billion rubles — this is not some kind of percentage, this is half again as much as in 2010.”

“The government is counting on all this enormous money being effectively used to improve the quality of the work of defense industry and state customers.”

“Meanwhile, according to data which I have, more than 30 percent of the total volume of the GOZ still doesn’t have contracts.”

There’s quite a lot in those statements.  Probably as much substantive as Putin’s said publicly about GOZ problems.

Tomorrow we’ll do Part II on the latest woes.  Then maybe we’ll look at 2011 — the year of the GOZ.  And possibly even a look at the GOZ since 2000 or so.

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One response to “Latest on GOZ Woes (Part I)

  1. Looking forward to part 2. Keep up the good work

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