Source: No Chance to Sign Contracts on Borei and Yasen Subs

21.05.2012 There is no chance that Russian Defense Ministry and United Shipbuilding Corporation (USC) would sign three contracts on Borei- and Yasen-class submarines in May, said an informed source in Russian defense industry.

"The reason for such pessimistic estimation is persisting intransigence between the parties over pricing issues and fruitlessness of numerous meetings held in recent two months", the interviewee told ITAR-TASS.

"In April and May there were about 20 meetings of the state client and the major executor, sometimes with participation of associated governmental departments, Ministry of Trade and Industry, Ministry of Economic Development, Defense Ministry, and Military Industrial Committee in order to conciliate the parties. None of those meetings led to effective result", the source said.

"Two more meetings are scheduled on Monday [May 21], one at defense ministry, and another at the Government", he added.

Intransigence between the parties lies in the fact that defense ministry considers the prices declared by USC groundlessly overrated, explained the insider. The corporation in its turn says 30-percent price cutting for five Borei subs would bring dozens billions of losses and lead to suspension of production at Sevmash shipyard and associated companies.

"Meanwhile, defense ministry has not fulfilled the Putin government's task to prepare cost-accounting documents based on technical design of the subs and prices offered by defense companies", said the interviewee.

According to another source in Military Industrial Committee supervising defense shipbuilding, three very important and large contracts have not been signed so far. The first one implies construction of five modernized Project 955A Borei strategic submarines with reinforced nuclear missile arms, other two contracts with design bureaus Rubin and Malakhit providing development works on those Borei-class subs and modernized Project 885M Yasen nuclear-powered attack submarines.

"However, take note that without two latter contracts signed, construction of the subs would not be possible", emphasized the interviewee.

As for him, the dead-ended discussion between defense ministry and USC "proves the need for fastest foundation of an independent agency dealing with placing and implementation of state defense order. Main task of that authority would be settling problems of prices for the most science-intensive and technically complicated products with the longest technology cycle, i.e. strategic and strike missile systems as well as their platforms, nuclear-powered submarines".

"We must not forget that the question is defense products having paramount importance for national security", stressed the interviewee.

According to Vzglyad newspaper, on May 5 an official in governmental committee responsible for military shipbuilding said that defense minister Anatoly Serdiukov on Apr 27 was trying to tie a contract for five Project 955A Borei submarines. He brought the price stated by United Shipbuilding Corporation 29% down saying it was groundlessly overrated. Serdiukov invited the corporation's directors to sign the contract on May 2, but shipbuilders did not accept the invitation, obviously, being unsatisfied with the 30-percent price cutting.

Earlier on that day, deputy chairman of government's Military Industrial Committee Yury Borisov said that disagreements on prices for Borei-class subs between defense ministry and United Shipbuilding Corporation would be settled by the end of May 2012. As was reported in Apr 2012, five Project 955A Borei strategic nuclear submarines with reinforced armament would be constructed in accordance with the contract tied between the ministry and the corporation. Each of them will be capable to carry 20 submarine-launched ballistic missiles.

SLBM Bulava will be commissioned into Russian Navy in Oct 2012 along with submarine Yury Dolgoruky, reported Navy Main HQ.

Meanwhile, a high-ranking naval officer said that the first serial Borei-class submarine Alexander Nevsky would perform one test launch of Bulava missile in the current year.

Prior to that, a source in Navy Main HQ said SSBN Alexander Nevsky would launch two Bulava missiles in Oct 2012.