Warships Must Be Built Under Unified Contracts – Russian Deputy PM

12.08.2013 Construction of warships must be carried out under unified contracts including the cost of their weapons systems to ensure their prompt delivery on budget to the Russian Navy, Deputy Prime Minister Dmitry Rogozin said.

Russian shipbuilders have been harshly criticized recently by President Vladimir Putin and Rogozin over delays in delivery of warships to the navy and inefficient use of the defense budget for the ambitious rearmament program until 2020.

“In order to prevent further delays in the delivery of warships, it is necessary to ensure they are built under unified, single, contracts that include provision of core weapons systems to be installed on these ships,” Rogozin said at a meeting of Russia’s Military-Industrial Commission.

Rogozin claimed the delays to the naval shipbuilding program had been caused by poor collaboration between the Defense Ministry and defense contractors, sparking a series of disputes over pricing and the quality of weaponry built for the Navy.

Recent audits of contracts signed by Russia’s United Shipbuilding Corporation (USC), which builds most of the navy’s ships, has revealed a shortage of funds needed for the construction of vessels in 2013-2015, he added.

“Audits of the contracts signed by USC have revealed violations in the implementation of some commercial deals closed by the corporation in 2011-2012,” Rogozin said, adding that these violations should be investigated by prosecutors.

USC, established in 2007, is Russia’s largest shipbuilding and ship repair company, comprising nine design bureaus and 39 shipyards. USC currently accounts for 70 percent of the domestic shipbuilding industry, according to its website. The corporation is wholly owned by the state.

The Russian Navy is expected to receive 24 submarines and 54 surface warships of various classes by 2020, according to the Defense Ministry.

The Russian government has allocated five trillion rubles ($166 billion) or a quarter of the entire defense procurement budget until 2020 for this purpose.