Tag Archives: Tractor Plants Concern

Suit, Countersuit Over GOZ

Kurganmashzavod (photo: Nakanune.ru)

This story should be of particular interest to those following the VDV, Ground Troops, and their combat vehicles.  The specific problems of KMZ illustrate general dilemmas of the GOZ.  The GOZ money trail is slippery.  And it explains why modern, or at least new, weapons and equipment aren’t produced or delivered, and the GOZ is only partially fulfilled. 

RIA Novosti (via Vedomosti) reports the Defense Ministry filed suits against Kurganmashzavod (KMZ), of “Tractor Plants” Concern, for breaking GOZ contracts.  KMZ, in turn, entered three countersuits seeking 1.5 billion rubles from the Defense Ministry for violating its contracts.

KMZ claims the Defense Ministry stopped accepting its products in fall 2010, causing the factory to fail to meet its obligations.  RIA Novosti reports First Deputy Defense Minister Aleksandr Sukhorukov said KMZ would be fined 3 billion rubles for breaking its 2010 contract to produce the BMP-3.  Two billion has also been cited.  The first hearing will be next week.

Nakanune.ru indicates KMZ had no GOZ contracts for 2011, during which the plant counted on 12 billion rubles worth of production.  Instead, it produced only 4.7 billion worth for the first eight months of the year.

In May, Main Military Prosecutor Sergey Fridinskiy pointed to KMZ as a prototypical failure of the GOZ.  The factory got an advance of 350 million rubles but, instead of sending money to its sub-contractors, it used it on internal needs.

Academy of Military Sciences Professor and PIR-Center Conventional Arms Program Director Vadim Kozyulin says:

“I understand that the enterprise’s leadership could have its own reasons.  The plant has many problems which could look more important and pressing from a local viewpoint.  But some way or other the resources to fill the order for the supply of armored equipment for the VDV came in, but went for something else.”

Kozyulin says they have the same problem in other enterprises, “but ‘Kurganmashzavod’ fell right under the chop.”  He says it won’t go well for KMZ, and the Defense Ministry may refuse to give the factory future orders. 

Nakanune also cites CAST analyst Dmitriy Vasiliyev who agrees this isn’t just KMZ’s problem, but a problem of the Gosoboronzakaz as a whole.  Igor Korotchenko suggests KMZ has little chance of winning its case, and needs to seek an out-of-court settlement.  But perhaps it’s too late already. 

It may be that KMZ is being made into a convenient example because others want to take it over.  It is an area of the OPK that could stand some consolidation.

Kozyulin suggests troubled KMZ should merge with Uralvagonzavod (UVZ).  UVZ and Russian Machines are apparently after KMZ parent “Tractor Plants” Concern.  They’ve approached Vnezhekonombank, which owns 100 percent of its shares, about managing “Tractor Plants” Concern, but the choice of a managing firm has been put off until 2012.

It certainly sounds like KMZ is headed downhill.  The dueling law suits, the untangling of KMZ’s management, and, at some point, the reorganization and restoration of its production capability will take time.  This means possibly years of delays in filling armored vehicle orders for the VDV and Ground Troops.

You may recall United Russia member Igor Barinov excoriated KMZ earlier this year for its poor handling of GOZ funds.  VDV Commander, General-Lieutenant Vladimir Shamanov also blamed KMZ for delays in getting the first BMD-4Ms for his troops. 

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BMD-4M Update

BMD-4M

An item on pending troop testing of the BMD-4M for VDV . . . .  No, they aren’t in the force yet.  Despite the optimism expressed below, it remains to be seen if the Defense Ministry will actually order the system upon completion of troop testing.  It sounds like the designers and builders have footed the bill — 200 million rubles — for the system’s development thus far.

From this week’s Voyenno-promyshlennyy kuryer:

“Troop testing of the modernized airborne combat vehicle BMD-4M is being conducted in the course of the 98th Airborne-Assault Division’s command-staff exercise (KShU), which will take place from 23 to 28 August near Ivanovo.”

“During the airdrop of military equipment, seven BMD crews will be inside the combat compartment of these vehicles.  Immediately on landing, the crews will move out to fulfill combat missions on unfamiliar terrain in the notional enemy’s rear area.”

“An airdrop of parachute troops and military equipment from aircraft of Military-Transport Aviation will occur in the course of the divisional KShU, which will be directed by VDV Commander General-Lieutenant Vladimir Shamanov.  In all, it’s planned to airdrop 15 pallets with military equipment, including the BMD-4M.”

“After the completion of troop testing of the modernized combat vehicle, development of which Kurganmashzavod, the Volgograd Tractor Plant and other enterprises of the ‘Tractor Plants’ Concern are engaged in, it will be accepted into the arms inventory of the ‘winged infantry’ and included in the state defense order.”

“Development and production of the BMD-4M is being conducted with the agreement of the Defense Ministry at the concern’s expense.  Expenditures on the first test models amounted to nearly 200 million rubles.”