State defense order can be 100% advanced

13.05.2011 Russian government analyzes the possibility of 100% advance of the state defense order, said Prime Minister Vladimir Putin on May 11 at the session of Russian Industrialists' Guild. "Now we are about to grant defense ministry with a right to pay 100% advance under certain conditions. Defense Ministry and Ministry of Finance prepare draft of the governmental resolution", he said.

However, hundred-percent advance will be given to those companies which can guarantee absolute execution of orders, Putin said. He assured that "basic suppliers and large stable companies" will have such opportunity. According to the prime minister, the government realizes possible risks of such step. "We comprehend this and ready to go for it consciously to support our defense industry", he said. But advances will be granted under certain conditions ensuring order execution.

The head of Russian government stated that profitability of domestic military companies should increase at least on 15%. "Profitability of defense ministry must be at least 15% higher", said the premier commenting the statement of the guild's chairman and the president of Rostehnologii Sergei Chemezov about 2-3% decrease of earnings among some defense companies in 2010. "Nonetheless, prices must be economically sound after all", pointed out Putin. "Of course, we can complain of inflation, price growth for metal, shipping and so forth. But often we face groundless price surge, and you are well aware of that".

Chemezov stated in his report that "fortunately, Russia's state defense order is growing, same as in developed countries". "But yesterday there was a hard talk on defense industry development at Medvedev's office. In particular, it was said product prices should be reasonable. However, the audience can confirm that defense ministry takes no notice of numerous expenses while analyzing price patterns", said the head of Rostehnologii. As of May 1, companies of Rostehnologii signed only 33.2% of planned contracts.

According to Chemezov, "execution of the state defense order was a sensitive issue at the meeting held by Dmitry Medvedev". "Deadlines for order placing are generally not kept", affirmed Chemezov. "And this is one of the basic reasons why state defense order is not executed on time. For example, in 2010 main part of a contract was signed in April-July and the rest – in September, while the deadline is November 25. Meanwhile, the technology cycle duration makes about 6-9 months", Chemezov added.